KEY POINTS
- U.S. prosecutors said Zhao 'bragged' about breaking the law to make Binance as big as it is today
- CZ's lawyers argued that the crypto magnate should only be sentenced to probation
- A total of 161 individuals wrote letters of support on Zhao's behalf ahead of his April 30 sentencing
Binance's co-founder and former CEO Changpeng Zhao may face three years behind bars after U.S. prosecutors argued that he should spend 36 months in prison for violating the Bank Secrecy Act.
In a sentencing memo, the prosecutors pointed out that Zhao, widely known in the cryptocurrency space as CZ, "bragged" about breaking American law so the world's largest crypto exchange by trading volume could be "as big as we are today."
"Given the magnitude of Zhao's willful violation of U.S. law and its consequences, an above-Guidelines sentence of 36 months is warranted. That sentence, together with the agreed $50 million fine, is sufficient," U.S. prosecutors said.
Zhao's legal counsel was quick to reject the proposed sentence, suggesting that the crypto mogul be sentenced to probation instead, as "no defendant in a remotely similar BSA case has ever been sentenced to incarceration. Mr. Zhao should not be the first."
His lawyers went on to note that CZ was only convicted of anti-money laundering (AML) compliance failure. "He has not pleaded guilty to – nor has the government alleged that he committed – any crime involving money laundering, fraud, theft, market manipulation, or any comparable for of unlawful conduct," they argued.
Originally, Zhao was supposed to face up to 18 months of jail time under the terms of his guilty plea with the U.S. Department of Justice (DOJ) in November. However, prosecutors said the "scope and ramifications of Zhao's misconduct were massive" and a higher sentence was only "appropriate" in his case.
The parties' arguments came after the tech executive, who, as part of his plea deal, stepped down from his position as Binance's CEO, sent a letter to District Judge Richard Jones, the judge overseeing his case.
He apologized for "poor decisions" made during his tenure as the CEO of the popular crypto exchange platform, and also admitted "full responsibility" for his actions that led to the DOJ's case against him. He said that while he could no longer "change" Binance's story of failed compliance controls, the crypto giant has now "implemented the most stringent anti-money laundering controls of any non-U.S. exchange" under his direction.
In the letter, he also apologized to the people he "let down," including his family, friends, employees, and "the larger crypto community."
Zhao wasn't the only one who sent a letter to the judge ahead of his sentencing next week, as a staggering 161 people submitted "letters of support on behalf of" Zhao, including five of his family members and over a dozen of his friends.
The majority of the letters were sent in by "colleagues, employees, and acquaintances," and more than two dozen "industry professionals and 10 "business, government, and community leaders" also submitted letters of support.
