Former crypto kingpin Changpeng Zhao could soon be sharing a cell with FTX fraudster Sam Bankman-Fried — and if the feds get their way, it will be for three years.
US prosecutors have recommended an above-guideline 36-month prison sentence for the disgraced Binance chief after the founder of the world’s largest cryptocurrency exchanges pleaded guilty to money laundering charges.
Prosecutors requested a longer sentence in a sentencing memo filed Tuesday evening in the Western District Court of Washington to “reflect the seriousness of his crimes,” CNBC reported.
Zhao – who called Bankman-Fried a “liar” and said he knowingly embezzled clients’ money – would still serve a sentence far less than the 25 years his rival received for the FTX fraud.
US authorities said Binance and Zhao – who is also a Canadian citizen – failed to report more than 100,000 suspicious transactions with designated terrorist groups, including Hamas, Al-Qaeda and the Islamic State of Iraq and Syria , or ISIS.
They called the company’s operations the “Wild West” under Zhao’s rule, adding that Binance had violated US laws on an “unprecedented scale” and with “willful disregard” for the company’s legal responsibilities , CNBC reported.
Prosecutors said Binance’s platform also supported the sale of child sexual abuse material and received a large portion of the ransomware revenue.
Accordingly, “a prison sentence of 36 months – twice the upper limit of the Guidelines range – would reflect the seriousness of the offense, promote compliance with the law, have an adequate deterrent effect and would be sufficient , but not greater than necessary, to achieve the objectives. of the sentence,” U.S. prosecutors said.
“Zhao bet he wouldn’t get caught and that if he did, the consequences wouldn’t be as bad as the crime. But Zhao has been arrested, and now the court will decide what price Zhao should pay for his crimes.
Zhao, 47, was freed on $175 million bail – and a federal judge late last year barred him from leaving America, rather than returning to the United Arab Emirates, from which he is a citizen.
He is scheduled to be sentenced April 30 in Seattle.
Zhao had agreed not to appeal a prison sentence of up to the maximum sentence under federal guidelines of 18 months.
He resigned as Binance chief last November, when he and the exchange admitted to violations, and the company agreed to a $4.32 billion fine.
Zhao also agreed to pay $50 million at the time, after ending his involvement in Binance, which he founded in 2017.
The sanction imposed on the crypto company included a criminal fine of $1.81 billion and restitution of $2.51 billion.
Zhao, commonly known as “CZ” in crypto circles, was a key player in the spectacular collapse of FTX.
Binance was reportedly in talks to buy FTX before its stunning implosion in November 2022 – but then pulled out and sold its stakes in FTT, the digital asset created by FTX, sparking a $6 billion run on the exchange crypto that customers were frantically searching for. to withdraw their deposits.
Bankman-Fried quickly found himself in a sticky situation after discovering that FTX was using its clients’ deposits to make risky bets using sister investment firm Alameda Research.
REUTERS
“It became pretty clear very quickly that there had been a misappropriation of user funds,” Zhao told CNBC just after Bankman-Fried was discovered in late 2022. “The user funds were gone.”
“He’s probably been doing this for a while and no one else knew about it until very recently,” Zhao said.
Bankman-Fried, 32, was held at the Brooklyn Metropolitan Detention Center until he was assigned to a federal prison, likely near his parents’ home in California.
With post wires
New York Post
