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Binance Founder CZ’s Sentencing Pushed Back, Reasons Unknown

Last Updated February 14, 2024 3:06 PM
Teuta Franjkovic
Last Updated February 14, 2024 3:06 PM

Key Takeaways

  • Binance’s postponed sentencing and travel denial have raised speculation about the outcome of CZ’s charges.
  • The court’s actions suggest lingering doubts about CZ’s willingness to face the full consequences of his actions.
  • The battle with the SEC underscores the struggle over how to define and regulate crypto assets.

The sentencing of Changpeng Zhao, the former CEO of the cryptocurrency exchange Binance, has been postponed  to April 30 by a U.S. court.

The Seattle Federal Court, which issued the notice, did not disclose reasons for the sentencing delay. Zhao’s lawyer has reportedly declined to comment on the matter.

CZ’s Sentencing Postponed to April 30

This court ruling means that CZ, who resides in the United Arab Emirates (UAE), will extend his stay in the U.S. by an additional two months. CCN reported in November last year that CZ admitted breaching U.S. anti-money laundering laws. His cryptocurrency exchange, Binance, accepted a $4.3 billion fine for alleged violations of anti-money laundering and sanctions regulations.

Following his plea, Zhao also resigned as CEO of Binance and agreed to a personal fine of $50 million.

Court Denies UAE Travel Request Citing Flight Risk

The delay in the sentencing of Binance founder Changpeng (CZ) Zhao for money laundering charges has come to light following media revelations in late January about a Federal court’s decision to deny his request to travel to the UAE for medical reasons. The refusal was based on concerns over CZ’s “enormous wealth,” which reportedly poses a flight risk.

This development, coupled with the court’s reluctance to allow CZ to leave the U.S. before his sentencing, has led some observers to speculate that the former CEO of Binance might face imprisonment. The speculation arises amidst the backdrop of CZ’s guilty plea to violations of U.S. anti-money laundering laws and the substantial fines levied against him and his company.

DOJ Plea Deal May Reflect Doubts in Case Strength

Crypto legal authority David Lesperance suggested to CCN that the Department of Justice’s (DOJ) choice to settle for a plea bargain, rather than pressing charges, highlights concerns over the robustness of their case against CZ Zhao.

This perspective suggests that the plea agreement could reflect a calculated decision by the DOJ, potentially stemming from anticipated difficulties or doubts in successfully prosecuting CZ Zhao.

Lesperance asserted:

“Whether CZ is given prison time or a probation like Arthur Hayes will be determined in 6 months.

However, even if sentenced to prison, it will be in minimum-security federal penitentiary….not the maximum security pen that SBF will be spending time in the future!”

As a reminder, previously, the judge acknowledged  that the defendant had willingly attended court, even though it wasn’t obligatory, signaling their willingness to cooperate with the case rather than evade it.

Consequently, he allowed the defendant to reside in the UAE, on the condition that they maintained a permanent address and informed their legal representatives of any alterations. However, it appears that the judge has reconsidered his stance, and now there’s a possibility that CZ could seriously consider the prison sentence.

Regulatory Ambiguity Under Fire in Binance’s Legal Showdown

The U.S. Securities and Exchange Commission (SEC) defended its regulatory jurisdiction over certain cryptocurrency assets in court last month, countering Binance’s motion for dismissal of the SEC’s lawsuit. The case marks a pivotal moment in defining the SEC’s oversight of the crypto industry, closely mirroring a similar regulatory debate with Coinbase.

Binance’s legal representative, Matthew Gregory, criticized  the SEC for not providing transparent regulations for the crypto sector, highlighting the challenges faced by the industry in seeking registration and compliance.

In response, SEC lawyers highlighted the adaptability of the Howey Test to differentiate securities from non-securities, showcasing the complex legal landscape surrounding cryptocurrency regulations.

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