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Binance founder Changpeng Zhao faces 3 years in prison for money laundering

These allegations pose a serious challenge to one of the largest players in the cryptocurrency industry, and the case could have significant consequences.

Date: 2024-04-24 Author: Marek Stiller
Binance founder Changpeng Zhao faces 3 years in prison for money laundering

U.S. prosecutors are demanding three years in prison for Binance founder Changpeng Zhao, according to a court filing on Tuesday.

Zhao is scheduled to be sentenced on April 30 in Seattle after pleading guilty in November to violating US anti-money laundering laws. He resigned as CEO of the cryptocurrency exchange, but retained a majority stake. As part of the deal, he agreed to a $50 million fine, and the company offered to pay $4.3 billion in penalties and damages.

“Given the magnitude of Zhao’s willful violation of U.S. law and its consequences, a 36-month prison sentence exceeding the guidelines is warranted,” U.S. prosecutors said.

Prosecutors push for harsher punishment for Crypto Mogul crimes

Zhao initially faced up to 18 months in prison, which he agreed to without appeal. In November, he was released on $175 million bail to await sentencing for violating banking laws. Nonetheless, he was required to comply with restrictions on travel in the US. Now, however, prosecutors are calling for a harsher punishment than federal guidelines recommend.

“Zhao benefited enormously for violating U.S. law,” the filing reads. “And the price of this violation must be significant in order to effectively punish Zhao for his criminal acts and deter others who are tempted to build fortunes and business empires by violating U.S. law.”

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Prosecutors allege that Zhao neglected to establish a robust anti-money laundering (AML) program at Binance. This allegedly allowed illegal actors to exploit the exchange. Moreover, fraudsters used Binance for activities such as providing mixing services to hide the origin of cryptocurrencies.

In addition, Binance is said to have facilitated transactions with Iranian customers from the US. The move undermined U.S. sanctions on Iran and threatened the currency’s liquidity.

Operational shortcomings and reporting failures

In February, the settlement resolved significant operational deficiencies identified at Binance. In particular, this included the platform’s failure to report more than 100,000 suspicious transactions linked to designated terrorist organizations such as Hamas, al-Qaeda and ISIS.

In addition, Binance faced allegations of facilitating transactions related to child sex abuse material and proceeds from ransomware activities.

Despite the legal hurdles, Zhao’s wealth has grown significantly over the past year, reaching nearly $10 billion, according to the Bloomberg Billionaires Index. Currently, his wealth exceeds $42 billion, placing him 29th on the list of the world’s richest people, according to the index.

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Marek Stiller
Marek Stiller
Founder of the "Cryptocurrency for Beginners" channel on YouTube. He collaborates with Łukasz to form the Arena Trading group, while at the same time being passionate about blockchain technology. His knowledge and experience in the cryptocurrency industry help beginner investors better understand this dynamic market.
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