US Prosecutors Seek 36 Months’ Jail for Binance Founder Zhao

In a court filing on April 23, US prosecutors said Binance founder and ex-chief executive Changpeng Zhao should serve 36 months in prison over the allegations of violating the anti-money laundering laws (AML).

Zhao pleaded guilty in the US to anti-money laundering and sanctions violations in November 2023. He then stepped down from his chief executive post. The exchange had appointed Richard Teng as its new CEO after Zhao’s departure. As part of the agreement, Zhao agreed to a $50 million fine, while the firm offered to pay $4.3 billion in fines and compensation. In return, Binance was allowed to continue operating while adhering to US regulations.

Previously, the federal sentencing guidelines set a maximum sentence of 18 months in jail, a condition he accepted without appeal. Although Zhao is currently out on a $175 million release bond in the US, his sentencing hearing is still scheduled for April 30. Moreover, a judge earlier denied his request to travel to Dubai. Now, prosecutors want to give him a more severe penalty than what the federal guidelines suggest.

The filing read:

“Zhao reaped vast rewards for his violation of US 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 US law.”

Prosecutors stressed that Zhao failed to establish a strong AML program at Binance. This reportedly enabled illicit actors to exploit the exchange. These actors used the platform for activities like operating mixing services to conceal crypto origins.

Operational Deficiencies and Reporting Failures

In February, a settlement addressed major operational shortcomings found within Binance. Notably, this included the exchange’s failure to report over 100,000 suspicious transactions linked to organizations such as al Qaeda, Hamas, and ISIS.

Additionally, the company faced allegations of enabling transactions related to child sexual abuse materials and proceeds from ransomware activities. Despite facing legal obstacles, Zhao’s wealth has grown remarkably over the last year, increasing by nearly $10 billion, per the Bloomberg Billionaires Index. His wealth is now more than $42 billion, making him the 29th richest person in the world.