Changpeng “CZ” Zhao is expected to be sentenced in February 2024. He is now challenging the government’s attempt to preclude him from returning to the United Arab Emirates (UAE) while awaiting trial with his family. In a court filing on November 24, authorities said that Zhao’s legal challenges are just beginning. Although Zhao has pleaded guilty to violating the United States Anti-Money Laundering requirements in a settlement with the Department of Justice, he may have to commit to a harsher punishment than anticipated.
“The defence claims that Mr. Zhao faces merely a “brief” sentence and has no incentive to flee. The reality is that the top-end of the Guidelines range may be as high as 18 months, and the United States is free to argue for any sentence up to the statutory maximum of ten years.”
A possible lengthier sentence counters legal experts’ consensus. Former Securities and Exchange Commission official John Reed Stark, Zhao would face 12 – 18 months at minimum-security prison under the U.S. Sentencing Guidelines. However, his attorneys seem to strive for no jail time or an alternative sentence, combining prison time with home detention and probation.
Zhao’s influence on the crypto industry may also be a determinant factor. Starks believes that if the “Department of Justice does not secure a sentence for CZ that deters future money laundering conduct in the crypto verse (and elsewhere), then this “plea deal” could end up backfiring on them.”
Stark also mentioned that seeking longer prison time for Zhao may be a challenge for the Department of Justice (DOJ). According to his analysis, the authorities must produce more considerable evidence showing his participation in criminal activity.
“Hopefully, DOJ has got something up their sleeve, or perhaps the Binance monitoring and other remedial requirements will reveal more egregious and chargeable crimes.”
Zhao was released on a $175 million bond requiring his return to the U.S. 14 days before his sentencing date of February 24, 2024. Stark noted that Judge Richard A. Jones is awaiting the government’s motion to extend the bail requirements through additional bond conditions or delay a decision.
Binance-CZ’s case is controversial among legal and business experts. Omid Malekan, author and adjunct professor at Columbia Business School, said that the DOJ’s approach to the exchange is significantly different from precedents.
“If [banks] they’d been held to the Binance Standard there’d be hundreds of managing directors in jail and less money for shareholder buybacks (or lobbying). But the bankers were smart enough to never question the game.”
As of November 21, Zhao agreed to a $4.3 billion resolution with the U.S. government over accusations of enabling individuals involved in unlawful activities to transfer funds through the exchange. As part of the settlement, he resigned from his position as CEO.