Changpeng Zhao, founder and CEO of Binance, attends the Viva Technology conference dedicated to innovation and startups at the Porte de Versailles exhibition center in Paris on June 16, 2022.
Benoit Tessier | Reuters
U.S. prosecutors are seeking a 36-month prison sentence for the former CEO of cryptocurrency exchange Binance on charges of facilitating money laundering, according to a sentencing memorandum late Tuesday.
The memorandum, filed in the Western District Court of Washington, states that Zhao must serve the higher sentence recommended under advisory guidelines to “reflect the severity of his crimes.”
According to advisory guidelines, Zhao's sentence will range from 12 to 18 months in prison.
“A custodial sentence of 36 months – double the top of the Guideline range – will reflect the seriousness of the offence, promote respect for the law, provide sufficient deterrence and be sufficient but not excessive. level necessary to achieve sentencing goals,” US prosecutors said.
Zhao allegedly intentionally failed to implement an effective anti-money laundering program as required by the Bank Secrecy Act and to allow Binance to effectively process transactions involving proceeds of illegal activity law, including transactions between Americans and individuals in sanctions jurisdictions.
Binance has been sued separately by the US Securities and Exchange Commission and Commodity Futures Trading Commission on allegations of mishandling of customer assets and the operation of an illegal, unregistered exchange in the United States
The US separately accused Binance and Zhao of violating the US Bank Secrecy Act and sanctions on Iran, having ordered Binance to pay $4.3 billion in fines and forfeitures. Zhao agreed to pay a fine of $50 million.
Zhao resigned as CEO of Binance last November after securing the offer and was replaced by former head of the Abu Dhabi markets regulator, Richard Teng.
Zhao was not immediately available for comment when contacted via social media platform X. Binance has not yet responded to a request for comment when contacted by CNBC.
'Unprecedented scale' of financial crime
Prosecutors said that Zhao violated US law on an “unprecedented scale” and that he “willfully disregarded” Binance's legal responsibilities.
In Tuesday's memo, prosecutors said that under Zhao's control, Binance operated under a “Wild West” model.
“Zhao bet that he would not be caught and if he did, the consequences would not be as serious as the crime,” the memo stated.
“But Zhao was arrested, and now the Court will decide what price Zhao must pay for his crimes.”
Zhao's formal sentencing is scheduled to take place on April 30.
