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Former Binance CEO Changpeng Zhao prepares for his sentencing on April 30 amid high stakes for the crypto industry. Scheduled in the Western District of Washington, the court will decide if Zhao's cooperation with U.S. authorities might soften his potential 10-year sentence.
High Stakes in Court: Changpeng Zhao Awaits Sentencing Amidst Legal and Industry Repercussions
Changpeng "CZ" Zhao, the former CEO of Binance, is slated to appear before a federal judge more than 160 days after pleading guilty to one felony count as part of a settlement agreement with US authorities, per Cointelegraph.
On April 30, Judge Richard Jones will hear from prosecutors and CZ's counsel in the United States District Court for the Western District of Washington. This is one of the most anticipated judicial procedures in the crypto field since former FTX CEO Sam Bankman-Fried's conviction and punishment. Zhao's sentencing hearing has already been rescheduled, but it was slated to take place before the end of the month when this article was published.
Zhao pleaded guilty in November 2023 to one count of violating the Bank Secrecy Act by failing to establish an effective Anti-Money Laundering (AML) program at Binance. He resigned as CEO as part of the plea agreement, in which the cryptocurrency exchange and Zhao agreed to pay $4.3 billion to settle "civil regulatory enforcement actions" in the United States, which did not include a Securities and Exchange Commission (SEC) complaint.
Judge Jones could sentence CZ to up to 10 years in federal prison under US sentencing guidelines, but his charge calls for a 12- to 18-month sentence. Bankman-Fried was sentenced to 25 years in prison on March 28. However, there are few similarities between the two cases, except that they both involve high-profile crypto community members. Some have claimed that, given his guilty plea and cooperation with authorities, Zhao could save prison time.
“I would say [these cases] are not comparable from a charges perspective, but they are extremely comparable from the perspective that the [Justice Department], the SEC, and the federal government are making it very clear that they are not going to tolerate nefarious behavior,” Moe Vela, a former Director of Administration for then-Vice President Joe Biden
Vela went on to say that regardless of whether the judge imposes a hefty punishment on CZ, US officials may be attempting to "send a message" to criminal participants in the cryptocurrency field. However, he suggested that the former Binance CEO could "see some leniency" from the judge due to his cooperation and guilty plea.
Regulatory Shadows: CZ's Sentencing Risks Escalate with Geopolitical Concerns
Mark Bini, a former Assistant U.S. Attorney in the Eastern District of New York, told Cointelegraph that, unlike Bankman-Fried's criminal case, CZ's felt more "like a regulatory offense." However, he added that there was a risk that events surrounding Hamas' attack on Israel would influence the judge overseeing CZ's sentencing.
Following the Hamas attack, numerous stories appeared stating that cryptocurrency was used to pay terrorist organizations. The allegations may relate to the former Binance CEO's failure to maintain an anti-money laundering program and the exchange's civil action.
“The wild card and where public sentiment might line up with what the government feels about the case is that there is that case out there against Binance [...] accusing them of having laundered funds related to Hamas,” said Bini. “Something like that [...] might be framed in some way as showing how serious that what looks like a regulatory offense has real-world consequences that prosecutors might argue should be taken into account.”
“The facts of the case may be so compelling to the judge in some bad way for CZ that the judge feels that a more significant sentence is called for,” Bini added.
Since his guilty plea, Zhao has been able to travel within certain areas of the United States on a $175 million bail. His defense team has requested that the former Binance CEO travel to the United Arab Emirates to visit relatives before his hearing, but the judge has denied all of them.
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