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Changpeng Zhao could face a 3-year prison term as DOJ seeks to deter crypto crime

The U.S. Department of Justice (DOJ) has called for a 36-month prison sentence and a $50 million fine for Binance founder and former CEO Changpeng Zhao, also known as CZ, in connection with his role in the crypto exchange's violation of federal sanctions and money laundering laws.

In a sentencing memo filed Tuesday night, DOJ attorneys argued for a significant increase in Zhao's prison term compared to the 18-month maximum stipulated in his November 2022 plea agreement. Zhao had pleaded guilty to violating the Bank Secrecy Act, with both the prosecution and defense agreeing to the $50 million fine.

The DOJ's filing stressed the gravity and extent of Zhao's misconduct, asserting that the recommended sentence would serve as a powerful deterrent to others considering violating U.S. law for financial gain.

"The sentence in this case will not just send a message to Zhao but also to the world," the filing stated, emphasizing the need for a significant penalty to effectively punish Zhao and discourage others from engaging in similar criminal acts.

Zhao's sentencing hearing, initially scheduled for late February, was postponed to April 30 by mutual agreement. Since his first appearance in federal court in Seattle, Washington last year, he has been unable to return to Dubai, where his partner and some of his children reside.

"Zhao reaped vast rewards for his violation of U.S. law, and the price of that violation must be significant to effectively punish Zhao for his criminal acts and to deter others who are tempted to build fortunes and business empires by breaking U.S. law," the filing added.

Binance, the world's largest crypto exchange, also pleaded guilty to charges alongside Zhao, agreeing to pay a substantial fine and report to a court-appointed monitor, who has yet to be named.

The DOJ's push for a longer prison sentence and the sizeable fine underscores the seriousness of the charges against Zhao and Binance, as well as the US government's efforts to enforce federal sanctions and money laundering laws within the crypto industry.

The exchange received a penalty of $1.8 billion in criminal fines, and a restitution of $2.5 billion.