Changpeng Zhao could face up to ten years in prison, according to the government’s new motion. One expert believes the crypto industry is unfairly criticized due to AML.
Former Binance boss Changpeng Zhao (CZ) should remain free until the court verdict, but not leave the United States due to a “manageable flight risk.” A new petition from the country’s Ministry of Justice contains similar language.
Former SEC Office of Internet Enforcement Chief John Reed Stark took on X to post the following:
“The U.S. Department of Justice (DOJ) charged Changpeng Zhao (CZ) with, and CZ pled guilty to, one count of violating the Bank Secrecy Act. The charge stems from a mammoth global criminal enterprise orchestrated by Binance, who also pled guilty, agreeing to pay a record $4.3 billion dollar fine and to adhere to a robust laundry list of compliance, monitoring, cooperation and other onerous corporate requirements going forward (…)
To date, the general consensus among legal experts is that, per the U.S. Sentencing Guidelines, CZ would likely receive a 12–18-month sentence at a minimum-security prison, even though his legal defense team will likely argue for no jail time, or, in the alternative, a light sentence comprised of a combination of prison time, home detention and probation.”
CZ In Trouble
On Nov. 21, in a settlement with the department, the exchange paid $4.3 billion and CZ agreed to step down as CEO and pay a $50 million fine.
CZ posted bail of $175 million to remain free until sentencing on February 23, 2024. However, prosecutors demanded that the former head of the platform be prohibited from leaving the United States for fear of escaping. They identified significant wealth outside the country and minimal connections to it as risks.
Prosecutors then said the former Binance director failed to provide clear and convincing evidence that he would not flee if he returned to the United Arab Emirates. On Nov. 23, lawyers challenged the petition to bar Zhao from leaving the United States.
Long Term Advice
John Reed Stark stressed that, unlike the previous motion, prosecutors were clear and unequivocal that at sentencing they could argue that CZ should be sentenced to ten years in prison.
“According to the guidelines, the maximum period […] can reach 18 months. The United States has the right to demand any penalty up to the ten years provided by law. […] Term […] will seem significant to you. “This speaks in favor of the proposed reasonable restrictions.” says the petition.
Judge Brian Tsuchida set a Nov. 27 deadline to review his decision to release CZ on pre-sentence bail.
Reed Stark conceded that Judge Richard A. Jones would compromise and impose additional conditions, strengthen release requirements, require new assurances from counsel and Zhao, order more interaction sessions, or ask for other, more specific assurances. The expert also did not rule out delaying the decision.
A former SEC lawyer warned that CZ remaining free could facilitate continued money laundering in the industry. As a result, the department’s deal with Zhao could “again have unpleasant consequences for the Ministry of Justice.”
“Hopefully the officials have something in stock. Or perhaps Binance monitoring and other calls for remediation will reveal more heinous and punishable crimes. Otherwise, the entire company debacle could become a slap in the face for CZ. And, unfortunately, a historical injustice of epic proportions,” Reed Stark warned.
By Audy Castaneda
