The founder and former CEO of Binance, Changpeng Zhao, is facing the possibility of a 36-month prison sentence as U.S. prosecutors are pushing for his imprisonment. This comes after Zhao pleaded guilty to violating anti-money laundering laws. Prosecutors argue that such a sentence would serve as a deterrent not only to Zhao but also to others who may be tempted to prioritize profits over compliance with U.S. laws.
According to court documents, prosecutors claim that Zhao’s actions were a deliberate strategy to rapidly expand Binance’s operations and maintain its position as the top cryptocurrency exchange. They allege that Zhao failed to establish and uphold an effective know-your-customer (KYC) system, which resulted in inadequate transaction monitoring and allowed suspicious and criminal users to conduct transactions through Binance.
Zhao had previously admitted guilt to violating the Bank Secrecy Act in November 2023. Despite being out on a $175 million release bond in the U.S., his sentencing hearing is set for Apr. 30. A request from Zhao to travel to Dubai was denied by a U.S. judge due to concerns about his substantial wealth posing a flight risk.
In related news, Binance’s Chief Operating Officer mentioned that a monitoring deal with the U.S. presents challenges for the company.