Qiao Changpeng, the founder of giant cryptocurrency exchange Binance, broke the law on an “unprecedented scale” and should be sentenced to three years in prison after pleading guilty to money laundering violations, federal prosecutors say. said in a court filing Wednesday.
In their own memo, the defense team countered that Mr. Zhao, 47, should receive a suspended sentence rather than a prison term, saying he had accepted responsibility for his crimes and demonstrated a commitment to charity work. .
Federal Judge Richard A. Jones in Seattle is scheduled to evaluate those dueling recommendations during Zhao's sentencing hearing on Tuesday. His sentencing is the latest milestone in a series of criminal prosecutions targeting some of the most powerful figures in the global cryptocurrency industry.
Just 18 months ago, Chao, who had risen to the top as Binance's chief executive, was involved in a series of events that led to the collapse of Binance's biggest rival, FTX, and the imprisonment of FTX founder Sam Bankman-Fried. contributed to the event. He was sentenced to 25 years in prison for fraud. Chao now faces his own prison sentence after admitting that he failed to build adequate systems to prevent money laundering at Binance and terminated his contract with prosecutors in November.
Under federal guidelines, the crime is punishable by 12 to 18 months in prison, prosecutors wrote in the memo. They noted that the U.S. Probation Service recommended a five-month prison sentence for Mr. Zhao. However, the memo states that the government is seeking a three-year prison term due to the “scope and impact” of Zhao's actions.
Binance founder Chao was once arguably the most powerful executive in the cryptocurrency industry. At times, Binance processed two-thirds of all his cryptocurrency transactions. According to Forbes magazine, Mr. Zhao is worth $33 billion.
But Binance has long been plagued by accusations that it broke laws to expand its business around the world. In November, the company agreed to pay $4.3 billion in fines and restitution to the U.S. government, resolving charges that it violated economic sanctions against Syria, Cuba, and Iran while allowing criminal activity to flourish on its platform. .
Separately, Zhao pleaded guilty to failing to maintain an adequate anti-money laundering program at Binance. As part of the deal, he agreed to pay a $50 million fine and step down as Binance's chief executive officer. He was replaced by Richard Teng, a former Singaporean regulator who was being groomed as his successor.
In court papers, Zhao admitted that he prioritized Binance's growth over compliance with the Bank Secrecy Act, which requires companies to avoid doing business with criminals and people under economic sanctions. According to court documents, he told Binance employees that “it's better to ask for forgiveness than permission,” and that Binance customers could open their accounts without sharing the kind of detailed personal information typically required by financial services companies. He is said to have given permission to create.
“Mr. Zhao's sentence should reflect the seriousness of his crimes,” prosecutors wrote in a filing Wednesday. “Zhao and Binance are putting US customers, the US financial system, and US national security at risk.”
In a memo, Mr. Zhao's lawyers emphasized that Mr. Zhao came to the United States from his home in the United Arab Emirates to plead guilty and argued that he deserved a lenient punishment. They wrote that Zhao admitted to non-compliance at Binance but did not plead guilty to her involvement in money laundering, fraud or theft.
“Mr. Zhao is not an icon. He is a devoted father and philanthropist,” the defense memo said. “He has already shown remorse for his transgressions and, more importantly, has improved.”
The memo also included letters from Zhao's friends and Binance employees, some of which said the company is working hard to cooperate with law enforcement agencies around the world. Ta. His lawyers described Mr. Zhao as a “frugal and humble person” and said he intended to give up 90 to 99 percent of his wealth.
The letter's authors included Zhao's two adult children, both students at U.S. universities, and Max Baucus, a former U.S. senator and ambassador to China. In his letter, Baucus, who served as an advisor to Binance, called Chao a “near genius” and “one of the most decent people I know.”
“My impression is that Binance has grown rapidly and become somewhat unwieldy,” he wrote. “He now clearly understands that he should have worked harder.”
Mr. Zhao has remained in the United States since his guilty plea after Judge Jones denied Mr. Zhao's request to return to his family in Dubai before sentencing. Prosecutors said in a memo that the suspect traveled freely throughout the United States, including to Telluride, Colorado, and Los Angeles.