A court hearing will be held on April 30, at which the punishment for the founder and former CEO of the Binance crypto exchange Changpeng Zhao (CZ) will be chosen. In an interview with Cointelegraph, lawyers and politicians discussed options for the development of events.
Charges
The ex-CEO of the trading platform will appear before a judge almost six months after pleading guilty to violating the Bank Secrecy Act due to his inability to maintain an effective anti-money laundering program on Binance.
As part of the agreement with the US Department of Justice, he pledged to pay a fine of $50 million and resign as CEO. For the exchange itself, the settlement amount was $4.3 billion.
According to the sentencing rules, the judge can impose 10 years in prison for Zhao, given the severity of the article. But CZ pleaded guilty to only one of the counts, so his punishment includes imprisonment for a period of 12 to 18 months.
At the end of March, the founder of the collapsed FTX, Sam Bankman-Fried, was sentenced to 25 years in prison on charges of money laundering, fraud and conspiracy. Experts noted the differences between the cases of the heads of the two crypto exchanges.
"I would say that [these cases] are not comparable in terms of charges, but they are extremely similar in terms of the Department of Justice, the SEC and the federal government. They make it clear that they are not going to tolerate heinous crimes and behavior," said Mo Vela, former director of the Joe Biden administration.
In his opinion, the US authorities may be trying to "send a message" to violators of laws in the crypto industry, and this does not depend on the severity of CZ's sentence. Vela also allowed "some leniency" to Zhao for his cooperation and admission of guilt.
Possible concerns
Mark Bini, former assistant U.S. Attorney for the Eastern District of New York, added that unlike the Bankman-Fried criminal case, Zhao's case is more "reminiscent of a violation of regulatory requirements."
However, in his opinion, there is a risk that the events surrounding the Hamas attack on Israel may influence the judge in sentencing CZ.
According to media reports, since December 2021, the Israeli authorities have blocked 189 accounts on the Binance exchange, allegedly belonging to illegal groups. Since October 7, the cryptocurrency exchange has closed, at the request of the authorities, more than 100 accounts related to the financing of Palestinian terrorists.
Bini noted that the charges against CZ also include laundering funds related to Hamas. If prosecutors focus on this issue, public opinion risks not being on the side of Binance and its founder:
"Something like this can be presented in such a way that serious violations of regulatory rules [by cryptocurrency exchanges] have real consequences, which, according to prosecutors, should be taken into account. [...] If the facts turn out to be so convincing to the judge in some way that is bad for CZ, he will see the need for a harsher sentence."
Zhao remains at large until sentencing, for which he posted bail of $175 million. However, prosecutors demanded that the former head of the platform be banned from leaving the United States, fearing escape. They cited significant wealth outside the country and minimal ties with the United States as risks.
Zhao's lawyers challenged the travel ban, but the court sided with law enforcement. In December, the court rejected the entrepreneur's request to return home to the UAE, despite the proposed bail of $4.5 billion.
In April, Forbes estimated CZ's fortune at $33 billion and placed him on the 50th line in the billionaires ranking.
Recall that Zhao was replaced as CEO of Binance by Richard Teng, head of regional markets.
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