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CZ Sentencing: When Will Binance Founder Changpeng Zhao Discover His Fate?

Last Updated December 7, 2023 9:54 AM
Teuta Franjkovic
Last Updated December 7, 2023 9:54 AM

Key Takeaways

  • Changpeng Zhao, has pleaded guilty to charges of AML violations, with a U.S. district judge accepting the plea.
  • The date for CZ’s sentencing has been set for early next year.
  • Binance agreed to a substantial penalty of $4.3 billion, while Zhao is obligated to pay an additional fine of $50 million.

The former CEO of Binance resigned and pleaded guilty  to violating criminal U.S. anti-money-laundering regulations in a move aimed at securing the company’s ongoing operations.

The details of the settlement involve Binance agreeing to pay $4.3 billion in penalties, marking one of the largest fines in corporate history.

Additionally, as part of a three-count indictment for money laundering, CEO Changpeng Zhao will personally pay $50 million.

Court Rules Defendant Guilty, Sentencing Date Set

CZ has admitted to violating the BSA, and U.S. prosecutors are urging the court to keep him in the U.S. until his sentencing.

In a document  filed on December 6, 2023, Seattle District Court Judge Richard Jones approved the plea agreement. Jones acknowledged the court’s review of the recommendation and the lack of objections, ordering that “the defendant is adjudged guilty of such offense.” All parties are scheduled to reconvene for the sentencing on February 23, 2024.

Zhao is slated for sentencing on February 23, 2024, facing a possible 18-month prison term. Presently, he is released on a $175 million bond. The court is still deliberating on the decision regarding his travel back to the United Arab Emirates, his place of residence.

Remorseful CEO Awaits Sentencing

According to the latest reports, CZ has been released from custody after posting a $175 million personal recognizance bond. The substantial bond reflects the financial commitment made by Zhao as part of the conditions for his release.

During a court hearing, Magistrate Judge Brian A. Tsuchida set CZ’s sentencing for February 23, although there is a possibility that this date could be subject to postponement. CZ conveyed remorse during the proceedings, expressing a desire to take responsibility and move forward.

He stated:

“I want to take responsibility and close this chapter in my life. I want to come back. Otherwise, I wouldn’t be here today.”

According to guidelines, CZ could potentially face a sentence ranging up to 18 months for the charges he pleaded guilty to.

This agreement marks the conclusion of extensive investigations into Binance. Founded by Zhao in 2017, the company has evolved into a pivotal hub within the global cryptocurrency market.

Despite its initial market share growth following the demise of FTX, one of its key offshore competitors last year, Binance has been under the shadow of a persistent criminal probe, which has lingered despite its ongoing success in the market.

According to Matrixport analyst Markus Thielen , the settlement represents a highly favorable outcome for Changpeng “CZ” Zhao and Binance.

With CZ relinquishing his role and the fine being lower than the initially speculated $10 billion, Binance is expected to maintain its position as one of the top three exchanges for the next 2-3 years.

Thielen anticipated  that other exchanges would strengthen their compliance measures and join monitoring-sharing agreements, which could, in turn, facilitate the approval of spot Bitcoin ETFs in the United States.

CZ’s DOJ Plea Deal Leaves Room for Doubt

Crypto legal expert David Lesperance told CCN that the Department of Justice’s (DOJ) decision to agree to a plea deal instead of pursuing charges raises questions about whether they had substantial doubts regarding the strength of their case against CZ.

This observation implies that the plea deal might indicate a strategic move by the DOJ, possibly influenced by uncertainties or challenges they anticipated in prosecuting the case against CZ Zhao.

He commented:

“Another interesting point is that the court allowed CZ to return to the UAE. 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!”

Lesperance is obviously on the right path since the judge acknowledged  that everyone he has released has faced some risk of flight, even those facing more severe consequences.

The judge also noted  that the defendant had voluntarily appeared in court despite not being required to do so, indicating their intent to cooperate with the case rather than flee. Therefore, he granted the defendant permission to reside in the UAE, provided they maintained a fixed residence and notified their lawyers of any changes.

It’s also interesting that BitMEX, a cryptocurrency derivatives trading platform based in the Seychelles, was one of the first to report the news .

The resolution, in fact, bears similarities to a previous case involving the exact BitMEX. In that case, the former CEO, Arthur Hayes, pleaded guilty  to violating anti-money-laundering laws and was subsequently sentenced to two years of probation, thereby avoiding a potential prison term of six to 12 months.

It will be interesting to see how this saga will evolve. Zhao will be residing in the United Arab Emirates, which does not have a mutual extradition treaty with the U.S.

However, there is a treaty signed last year between the two countries that enhances the sharing of law-enforcement evidence. This legal context adds a layer of complexity to any potential extradition proceedings or attempts to bring Zhao to the U.S. for legal matters related to the case.

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