🚨Crypto Crime Update: DOJ Argues Binance CEO CZ Should Get 36-Month Prison Sentence--Double the Recommended Guideline Range.
In its sentencing memorandum, prosecutors argue that: (1) Zhao's actions were not just oversights; they were strategic business decisions aimed at maximizing profits at the expense of legal compliance. He admitted that non-compliance was pivotal to Binance's rapid growth and financial success.
Binance failed to meet basic AML requirements under the BSA. This failure led to the platform being used for laundering money from criminal activities, including transactions with users in countries under U.S. sanctions.
Binance, under Zhao’s leadership, engaged in schemes to mislead regulators about the true nature of its customer base and its compliance with U.S. laws. This included tactics to mask the activity of U.S. users to appear as though they were from other regions.
Guideline Calculations: The base offense level was calculated considering Zhao’s role in the offenses and the amount of money involved. With enhancements for his knowledge of the funds being proceeds of unlawful activity, the offense level reached 13, suggesting a guideline imprisonment range of 12 to 18 months.
The prosecution argues for a sentence of 36 months based on the scale of the violations and their impact on U.S. national security and the integrity of the financial system.
DOJ argues the scope of Binance’s operations and the deliberate choices made by Zhao significantly undermined U.S. regulatory frameworks and national security. The harm caused was extensive, with Binance facilitating nearly $900 million in transactions violating U.S. sanctions against Iran and other sanctioned regions.
The DOJ argues the recommended sentence of 36 months reflects the need for a strong deterrent to prevent similar future violations by others in the financial and cryptocurrency sectors.
CZ's legal team filed a sentencing memorandum advocating for a downward variance from the sentencing guidelines and requested probation rather than prison.
The defense argues for a probationary sentence for Changpeng Zhao, emphasizing that he is a first-time, non-violent offender who did not intend to harm anyone. Zhao voluntarily entered the U.S. to face charges, demonstrating responsibility and a commitment to reform, notably transforming Binance into a compliance leader within the industry. Citing Zhao's lack of recidivism risk and significant collateral consequences already suffered, the defense points to similar legal precedents that support probation rather than imprisonment for comparable cases. Additionally, they highlight the potential for harsher imprisonment conditions due to his non-U.S. citizen status. The defense argues that these factors, alongside his proactive efforts and a lifetime of positive contributions, justify a probationary sentence as sufficient and appropriate under the law.
CZ's sentencing hearing is on April 30, 2024. Stay tuned for more.