The Department of Justice is seeking a 36-month prison sentence and a $50 million fine for former Binance CEO Changpeng Zhao. File Photo by Miguel A. Lopes/EPA-EFE
April 24 (UPI) — Federal prosecutors Tuesday recommended 36 months in prison and a $50 million fine for former Binance CEO Changpeng Zhao after he pleaded guilty to violating money laundering laws under the Bank Secrecy Act.
In the sentencing memo filed Tuesday, prosecutors said Zhao who founded Binance in 2017 was “operating on a Wild West model that, as one compliance employee said, told criminals ‘come to Binance we got cake for you,'” as the platform rapidly grew to become the world’s largest cryptocurrency exchange within a year.
The sentencing recommendation exceeds the federal guidelines range of 10-16 months. His sentencing is expected April 30.
Prosecutors said billions in illegal profits were made as Zhao “reaped vast rewards for his violation of U.S. law, and the price of that violation must be significant to effectively punish Zhao for his criminal acts and to deter others who are tempted to build fortunes and business empires by breaking U.S. law.”
While prosecutors said the $50 million fine is a small fraction of Zhao’s wealth, it’s “a historically large fine for an individual U.S. defendant.”
Binance pleaded guilty to conspiracy to violate the BSA, violating the International Emergency Economic Powers Act and failure to register as a money-transferring business.
Under a plea agreement, the crypto exchange agreed to pay $4.3 billion in penalties, the most ever paid by a money services business, according to the Justice Department.
“These exceptional financial penalties-which directly resulted from Zhao’s conduct demonstrate the nature and seriousness of Zhao’s offense,” the sentencing memo said. “Those penalties are tied directly to the profits Binance earned and the vast transactions it processed, reflecting the extraordinary scope of the scheme.”
The sentencing memo said Zhao violated U.S. law on “an unprecedented scale” as he led the massive financial institution, processing trillions of dollars in cryptocurrency trades per year.
The Justice Department said Binance also harmed U.S. national security by violating sanctions against Iran while “illicit actors flocked to the exchange.”
The U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission have separately sued Binance for the alleged mishandling of customer assets while operating an illegal, unregistered exchange in the United States.
Zhao quit as Binance CEO in November after agreeing to the plea deal with the Department of Justice.
On Tuesday Philippines market regulators ordered Apple and Google to remove the Binance app from their stores for securities violations and to prevent “the further proliferation of its illegal activities” in the country.
