A former Binance chief, Changpeng Zhao, is reportedly facing a prison sentence as the United States (US) federal prosecutors are urging the judge to impose a three-year term and a $50 million fine.
Naijaonpoint understands that this comes after Zhao, a Canadian national, resigned from his position at the world’s largest cryptocurrency exchange platform as part of an agreement with US authorities.
Investigations revealed that Binance failed to prevent transactions involving extremist groups such as the Islamic State, al-Qaeda, and Hamas.
Zhao has pleaded guilty to violating US anti-money laundering laws, and Binance has already agreed to pay $4.3 billion to settle the charges.
Despite this crime typically resulting in probation, prosecutors are seeking a harsher punishment for Zhao.
“He made a business decision that violating US law was the best way to attract users, build his company, and line his pockets.
“The sentence in this case will not just send a message to Zhao but also to the world,” Justice Department lawyers said of Zhao in a sentencing memorandum.
Zhao’s legal team contended in a court filing that probation as a penalty is equitable, suitable, and in accordance with established legal standards.
They highlighted Zhao’s admission of guilt and his charitable endeavours.
“I made mistakes, and I must take responsibility,” Zhao, who lives in the United Arab Emirates, said in a November post on X, formerly Twitter.
Naijaonpoint recalls that in 2017, Binance was established and quickly dominated the crypto-trading market, leading its founder and CEO, Zhao, to become a billionaire.
Although initially founded in China, Binance relocated its operations to various international locations following a crackdown on the crypto sector by Beijing.
Binance operates crypto exchanges and offers a range of services worldwide. However, it faced significant challenges when the crypto markets collapsed and regulators began scrutinizing the legality of its business.
The volatile industry experienced a surge in 2021, driven by the introduction of complex products and endorsements from celebrities, resulting in a valuation exceeding $3 trillion in 2022.
Unfortunately, a series of scandals, including the collapse of FTX, Binance’s main rival exchange, in November 2022, and criminal charges against several industry executives, eroded public confidence and prompted investors to withdraw their funds from the crypto market.
Nevertheless, the crypto industry has made a comeback in recent months, largely due to US regulators approving exchange-traded funds (ETFs) in bitcoin. These ETFs enable investors to trade the asset without the need for a crypto account.
Binance’s newly appointed CEO, Richard Teng, stated in an interview with AFP this month that the company has invested hundreds of millions of dollars in compliance efforts and is closely collaborating with regulators.