The US Department of Justice (DOJ) has recommended a sentence of three years for CZ, the founder and former CEO of Binance, stating that an increased term is necessary to reflect the seriousness of the crimes. In a memorandum released on Tuesday evening local time, the DOJ accused CZ of violating federal sanctions and anti-money laundering provisions under the Bank Secrecy Act through his cryptocurrency exchanges Binance and Binance US. The prosecutors have requested a sentence of 36 months, despite the maximum term agreed upon in the November 2023 plea agreement being only 18 months. The DOJ argues that the 18-month sentence is inadequate to fully punish the damage caused to US national security and the scale of misconduct involved, and therefore, a sentence twice as long is necessary to reflect the severity of the crimes.
The memorandum also reiterated the DOJ’s arguments from the initial indictment of Binance and CZ last year, stating that CZ failed to implement effective anti-money laundering (AML) measures within Binance. This allowed illegal activities, including the provision of mixing services to hide the source and ownership of cryptocurrencies, the receipt of illegal proceeds from various software-based fraudulent activities, and the transfer of funds from dark web transactions, to take place on the exchange. The prosecutors hold CZ responsible for making business decisions that violated US laws, deliberately ignoring transactions between US users and individuals from sanctioned regions, believing that this was the best way to attract users and expand the company’s operations.
The US government stated, “The outcome of this case is not only a message to CZ, but also a warning to the world. CZ has amassed great wealth through violations of US laws, and the cost of such violations must be significant in order to effectively punish his criminal behavior and deter others who may have similar intentions of building their own business empires by violating US laws.”
CZ’s defense team has actively sought probation, claiming that the charges are narrow and unprecedented. They argue that CZ did not facilitate illegal financial transactions within Binance and that the suspicious transactions accounted for only a negligible portion of the overall trading volume on the platform, making it difficult to prove CZ’s deliberate involvement. Furthermore, the defense lawyers point out that CZ did not evade his responsibility, as he pleaded guilty to money laundering and sanctions violations in November 2023 in the US, agreed to pay a $50 million fine, waived his right to appeal the 18-month sentence, and resigned as CEO. Additionally, Binance agreed to pay a total of $4.32 billion, including a $1.81 billion criminal fine and $2.51 billion in restitution, making it one of the largest corporate fines ever. CZ has also taken active steps to rectify past negligence and further strengthen Binance’s compliance efforts and measures.
The defense team also states in their filing that in similar cases involving violations of the Bank Secrecy Act and money laundering, defendants have never been sentenced to imprisonment. Combined with CZ’s attitude and low likelihood of reoffending, they are requesting probation, which could include house arrest at CZ’s residence in Abu Dhabi.
The defense documents state, “As a non-US company, it is not illegal for Binance to have users from US-sanctioned countries on its platform. The charges against the company and CZ are unprecedented and narrow.”
CZ has apologized for his past decisions in a letter submitted by his defense team to the judge presiding over the case, expressing remorse for his “terrible decisions” and willingness to take full responsibility for his actions. In the letter, CZ stated, “I have no excuses for failing to establish the necessary compliance measures at Binance, and I assure you that this is the only time I will have any contact with the criminal justice system.”
In addition to the personal letter, CZ’s family and friends have submitted a total of 161 letters to the court in support of CZ, including co-founder of Binance and CZ’s current partner, He Yi, CZ’s wife, Yang Weiqing, CZ’s mother, children, and colleagues, hoping for leniency from the judge.
Currently, CZ remains free on a $175 million bond, but his request to return to Dubai has been denied by the judge. The sentencing hearing is scheduled for April 30.
Source:
Coindesk, Coindesk, CNBC
