As Changpeng “CZ” Zhao, the founder and former CEO of cryptocurrency exchange Binance, awaits his fate on April 30, U.S. prosecutors have requested he serve 36 months in prison, according to a Department of Justice sentencing memo filed Tuesday.
“Given the magnitude of Zhao’s willful violation of U.S. law and its consequences, an above-guideline sentence of 36 months is warranted,” prosecutors wrote to the U.S. district court for the Western District of Washington. Federal guidelines are a maximum prison term of 18 months for Zhao, who agreed not to appeal any sentence up to that length.
Zhao pleaded guilty to criminal charges in November, admitting to violating money laundering requirements in the U.S., and subsequently stepped down as CEO. He has been free on a $175 million bond. Zhao also agreed to pay a $50 million fine, alongside larger penalties to Binance of $4.3 billion, to end the criminal case. In exchange, Binance was permitted to continue operations in the U.S.
“The sentence in this case will not just send a message to Zhao but also to the world,” prosecutors wrote. “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.”
But some industry onlookers doubt the likelihood of Judge Richard Jones being persuaded by this request.
“I feel they may have overreached, and I’d be surprised if CZ got 36 months or anything close to it. The DOJ has not proved in court that CZ knew any details about the massive felonious fraud that occurred under his watch,” Terrence Yang, managing director at Swan Bitcoin told Fortune via email.
“And I’m usually with the DOJ on stuff like this,” added Yang.
🚨ICYMI: The US DOJ is seeking 36 months for CZ. For what it’s worth we don’t think he’ll get any jail time. We think he’ll get his fine, have to wear an ankle monitor, do some house arrest, have his travel restricted, and that’s basically it. Similar to Arthur Hayes of BitMEX. pic.twitter.com/cgwLhjKofc
— Autism Capital 🧩 (@AutismCapital) April 24, 2024
In a concurrent court filing, also filed Tuesday, Zhao admits that the company’s approach to U.S. regulations was: “Better to ask for forgiveness than permission.” The filing cites a conversation from 2019 in which Zhao wrote, “If we blocked the U.S. users from day 1, Binance will not be as big as we are today…wait for the U.S. regulators to come to us.” The filing goes on to add: “Zhao deeply regrets his offense, and he has shown exceptional acceptance of responsibility and redemption.”
Despite pleading guilty and awaiting jail time, Zhao has remained active in the crypto industry. Last month, he announced Giggle Academy, an educational project focused on teaching children age 3 and under about crypto and blockchain, but will issue “no new tokens.”
We wanted the @GiggleAcademy logo to show youth, fun, positive energy, and growth. We also want to show respect to our “Binance heritage”.
— CZ 🔶 BNB (@cz_binance) April 24, 2024
1. The logo is a child’s face, symbolizing youth.
2. The smiling face is made of the “Gi” characters (rotated 90 degrees counterclockwise),… https://t.co/On781BAi3J
Revealing the project’s logo on Wednesday, Zhao wrote on X: “We wanted the Giggle Academy logo to show youth, fun, positive energy, and growth. We also want to show respect to our ‘Binance heritage.’”
