US prosecutors seek 36-month prison sentence for ex-Binance CEO Changpeng Zhao

Binance founder and CEO Changpeng Zhao attends the Viva technology conference dedicated to innovation and startups at the Porte de Versailles exhibition center in Paris on June 16, 2022.

Benoit Tessier |

US prosecutors are seeking more than 36 months in prison for the former CEO of cryptocurrency exchange Binance on money laundering charges, according to a sentencing memorandum released late Tuesday.

Zhao should receive the higher sentence recommended by advisory guidelines that “reflects the seriousness of his crime,” the memo, filed in Washington’s Western District Court, said.

Zhao’s sentence was 12 to 18 months in prison, according to advisory guidelines.

“A sentence of 36 months’ imprisonment – ​​twice the upper end of the guideline range – should reflect the seriousness of the offence, increase respect for the law, provide an adequate deterrent and be sufficient but not excessive to achieve the objectives of the sentence.” US prosecutors.

Zhao is accused of knowingly failing to implement an effective anti-money laundering program as required by the Bank Secrecy Act and actually allowing Binance to process transactions involving the proceeds of illegal activities, including transactions between US persons and individuals.

Binance has been sued separately by the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission on suspicion of misappropriating customer assets and operating illegal, unregistered exchanges in the U.S.

The United States has separately accused Binance and Zhao of violating the US Bank Secrecy Act and has imposed sanctions on Iran and ordered Binance to fine and forfeit $4.3 billion. Zhao agreed to pay a $50 million fine.

Following this request, Zhao stepped down as CEO of Binance in November last year and was replaced by Richard Teng, the former head of the Abu Dhabi Markets Regulator.

Zhao was not immediately available for comment when contacted via social media platform X. Binance did not respond to a request for comment when contacted by CNBC.

Prosecutors said Zhao’s violations of US law were “unprecedented” and showed “willful disregard” for Binance’s legal responsibilities.

In Tuesday’s memo, prosecutors said that under Zhao’s control, Binance operated in a “Wild West” model.

“Chao was betting that he wouldn’t get caught and that if he did, the consequences wouldn’t be as serious as the crime,” the memo said.

“But Zhao was caught, and now the court will decide what price Zhao should pay for his crime.”

Zhao’s formal sentencing is expected to take place on April 30.