What Awaits The Former Ceo Of Binance?

CZ could face a prison sentence ranging from 12 to 18 months under U.S. sentencing guidelines; however, the Justice Department is considering the possibility of seeking a longer sentence.

A recent court filing indicated that despite Changpeng "CZ" Zhao admitting to violating United States Anti-Money Laundering laws, legal challenges are just beginning. Scheduled to be sentenced in February 2024, CZ is fighting against the U.S. government's efforts to prevent his return to the United Arab Emirates while awaiting his sentence with his family. However, a new filing on November 24th suggested that CZ could face a harsher sentence than initially anticipated:

"The defense argues that Mr. Zhao faces only a 'slap on the wrist' and has no reason to flee. The reality is that the sentence's upper limit could be up to 18 months, and the United States is free to seek any sentence up to the legal maximum of 10 years."

Legal experts expressed skepticism about a longer sentence. Securities and Exchange Commission official John Reed Stark, in his analysis, stated that Zhao would likely receive a minimum-security prison sentence of 12 to 18 months under U.S. Sentencing Guidelines and emphasized that CZ's legal team might appeal the prison sentence or seek an alternative penalty combining house arrest and supervised release.

Zhao's past in the crypto industry could also influence his fate. Stark believed that if the Department of Justice (DOJ) doesn't impose a sentence that deters money laundering in the crypto world, there is a possibility of the "deal" backfiring on the DOJ.

Requesting a longer prison sentence for Zhao on behalf of the Department of Justice, according to Stark's analysis, may require government officials to present more concrete evidence of Zhao's wrongdoing. Stark continued his remarks, expressing hope in his X post, saying, "Hopefully, the DOJ has something, or the Binance investigation reveals more horrifying crimes."

Zhao was released on a $175 million bail with the condition of returning to the U.S. 14 days before the scheduled sentencing date of February 24, 2024. Stark noted that Judge Richard A. Jones could evaluate the government's request on November 27 and could issue an additional bail decision or defer the decision.

The CZ case has sparked debates among legal and business experts. Omid Malekan, an author and assistant professor at Columbia Business School, highlighted that the Justice Department's approach to Binance significantly differs from its approach to traditional financial institutions:

"If banks were treated like Binance, there would be fewer CEOs and shareholders in jail for buybacks (or lobbying), but bankers are smart enough never to question the game."

On November 21, Zhao admitted to allowing individuals engaged in illegal activities to transfer money through the exchange and reached a $4.3 billion deal with the U.S. government. As part of the agreement, he resigned from his CEO position.