U.S. prosecutors have recommended a three-year prison sentence for Changpeng Zhao (CZ), the co-founder of Binance, one of the world’s largest crypto exchanges. This recommendation comes after CZ pleaded guilty to charges of violating U.S. anti-money laundering laws.
The Department of Justice’s (DoJ) recommendation is greater than the federal sentencing guidelines, which suggest a maximum of 18 months for such offenses.
Citing the severity of CZ’s willful violation of U.S. law, the DoJ argues that a longer sentence is warranted to serve as a deterrent to others and to punish CZ for his actions.
CZ’s legal troubles began when Binance, under his leadership, was accused of failing to comply with U.S. anti-money laundering requirements. The exchange’s strategy, described as the “Wild West” approach, led to CZ becoming one of the richest individuals in the crypto industry.
In November last year, CZ stepped down as CEO of Binance as part of a $4.3 billion settlement with the DoJ.
The sentencing memo filed by the DoJ emphasizes the need for a substantial sentence to reflect the gravity of the crimes and the benefits CZ reaped from his violation of the law.
The memo also highlights Binance’s growth strategy, which involved prioritizing expansion over regulatory compliance, a stance that CZ now reportedly regrets.
The recommendation has sparked discussions within the crypto community, with some industry observers questioning the likelihood of the court being persuaded by the DoJ’s request.
Some have suggested alternatives to prison, such as house arrest, drawing parallels to similar cases (namely Sam Bankman-Fried) in the industry.
CZ’s sentencing is scheduled for April 30, and the outcome is eagerly awaited by both the crypto industry and regulatory bodies. The case is seen as a pivotal moment that could shape the future of cryptocurrency regulation and the approach of exchanges toward compliance with U.S. laws.
The outcome of CZ’s case may set a precedent for how the U.S. government handles similar situations in the future and could influence the operational strategies of crypto exchanges worldwide.
