US Department of Justice Seeks 3-Year Sentence for CZ, Arguing That an Increased Term Reflects the Severity of the Crime
The US Department of Justice (DOJ) issued a memorandum on Tuesday evening stating that CZ, the founder and former CEO of Binance, and its US affiliate Binance.com, violated federal sanctions and anti-money laundering regulations under the Bank Secrecy Act. Prosecutors are seeking a 36-month sentence.
The memorandum noted that although CZ’s maximum sentence under the November 2023 plea agreement is only 18 months, considering the way the exchange operates in the US and the scale and impact of Binance’s operations in the country, 18 months “would not adequately punish the harm caused to US national security and the misconduct of this magnitude.” Therefore, an increase in the sentence to twice the original term is deemed “appropriate and reflective of the seriousness of the crime.”
The document also reiterated the arguments made by the DOJ during its initial indictment of Binance and CZ last year, stating that CZ failed to implement an effective anti-money laundering (AML) program at Binance, allowing illegal activities such as providing mixing services to conceal the source and ownership of cryptocurrencies, receiving illegal proceeds from various software-based extortion schemes, and transferring funds from dark web transactions.
Prosecutors argued that CZ was responsible for making business decisions that violated US law, adopting a “Wild West” approach and deliberately disregarding transactions between US users and individuals in sanctioned regions, believing it to be the best way to attract users and expand the company’s business.
The US government stated, “The judgment in this case is not only a message to CZ, but also a warning to the world. CZ has gained enormous wealth by violating US law, but the corresponding cost for such violations must be significant in order to effectively punish CZ’s criminal conduct and to deter others who may have similar intentions of building their own business empire by violating US law.”
Defense attorneys actively sought probation, arguing that the charges were narrow and unprecedented.
CZ’s defense team strongly rebuked the sentencing recommendation proposed by the US Department of Justice, maintaining that CZ did not facilitate illegal fund transactions within Binance. They argued that the suspicious transactions accounted for an insignificant portion of Binance’s overall trading volume, making it difficult to prove CZ’s deliberate involvement.
Furthermore, the defense lawyers pointed out that CZ did not evade his responsibilities. In November 2023, CZ pleaded guilty to money laundering and sanctions violations in the US, agreed to pay a $50 million fine, waived his right to appeal the 18-month sentence, and resigned as CEO.
Additionally, Binance agreed to pay $4.32 billion, including $1.81 billion in criminal fines and $2.51 billion in restitution, making it one of the largest corporate fines in history. CZ also actively rectified past negligence and further strengthened Binance’s compliance applications and measures.
CZ’s defense team also stated that no defendant has ever been sentenced to imprisonment in similar cases related to money laundering under the Bank Secrecy Act. They emphasized CZ’s attitude and the low likelihood of reoffending. They requested probation, with possible alternatives including house arrest at CZ’s residence in Abu Dhabi.
The defense documents mentioned, “As a non-US company, Binance does not violate the law by having users from sanctioned countries on its platform. The charges brought against the company and CZ are unprecedented and narrow.”
In an effort to support CZ, his family and friends submitted 161 letters to the court, expressing solidarity and apologizing for the “bad decisions” CZ made in the past. CZ himself apologized in his letter, stating, “I have no excuse for failing to establish the necessary compliance measures at Binance, and I assure you that this is the only time I will have any involvement with the criminal justice system.”
In addition to personal letters, CZ’s supporters, including Binance co-founder and current partner He Yi, CZ’s wife Yang Weiqing, CZ’s mother, children, and colleagues, submitted a total of 161 letters to the court, hoping for leniency from the judge.
Currently, CZ remains free on a $175 million bond, but his request to return to Dubai was denied by the judge. The sentencing hearing is scheduled for April 30.
Source:
Coindesk, Coindesk, CNBC