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A US Court Fines Binance 4.3bn USD, Founder Earns Jail Term

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Mr Changpeng Zhao, aka CZ, Founder and Former Chief Executive Officer of Binance

The 47-year-old owner and founder of Binance, Mr Changpeng Zhao, who is also very famous with the appellation, CZ, has been sentenced to four months in prison while the company, Binance has also been fined 4.3bn USD to be paid into the US government treasury for money laundry.

A US District court judge in Seattle, Washington, Justice Richard Jones, gave the judgement Tuesday, 30th April 2024, having satisfied that Zhao committed money laundry of which the accused had earlier in November 2023 pleaded guilty of the charge.

The court also fined the former Chief Executive and Chief promoter of Binance, $50 million, for finding him culpable of violating the Bank Secrecy Act by willfully failing to set up an effective anti-money laundering system at Binance, the cryptocurrency exchange company he founded and ran as CEO from July 2017 to November 2023.

The $4.3 billion in fines and restitution for the company’s failure to register as a money-transmitting business was earlier imposed by the US Department of Justice in November 2023.

In the argument that ensued before judgment was read on Tuesday, 30th April 2024 the prosecutors argued that Zhao knew of the illegal activity going on at Binance.

Justice Richard Jones of the Federal Court, Seattle, Washington, USA

In what looked queer for a judge to interject in the Nigerian environment, the judge disagreed, saying: “There’s no evidence that the defendant was ever informed”.

Zhao, a Chinese-born Canadian citizen, resident in the United Arab Emirates, UAE, arrived at a federal courtroom in Seattle Washington, Tuesday, along with his mother, son, nephew and sister who patiently sat throughout the proceedings and until the judgement was read.

Federal prosecutors at the Seattle Court in Washington had requested three years behind bars for Zhao, while his defense counsel pressed for five months probation.

Prosecutors argued that Zhao knew of the illegal activity perpetrated at Binance yet, the judge disagreed, saying: “There’s no evidence that the defendant was ever informed”.

Furthermore, the Justice Department pushed for a sentencing enhancement with so much argument and references yet, the judge rebuffed those claims and was of the notion that Zhao accepted responsibility for the crimes he was charged with.

Another counsel holding brief for the US government accused Zhao of deliberate efforts at breaking the law which were ‘integral’ to tap the U.S. financial system.

Furthermore, government prosecutors averred that “If Mr Zhao does not face incarceration after deliberately and willfully planning to violate U.S. law to build the largest crypto exchange in the world and get rich in the process…then no one will face incarceration and the [Bank Secrecy Act] will be a dead letter”.

Prosecutors accused Zhao of encouraging “suspicious and criminal users” to use Binance and did not report dubious transactions to the US government as required by the Bank Secrecy Act.

In one of the numerous written submissions by the prosecutors, it charged that “Zhao knew that his decision not to implement an effective AML program would result in Binance facilitating transactions between U.S. users and users in Iran and other sanctioned countries and regions in violation of U.S. law”.

The written allegation further stated that “Binance caused $898 million worth of sanctions violations by processing illegal transactions involving people residing in Iran”, the government added.

The crypto founder’s defence lawyer merely responded by filing more than 160 letters of support from Zhao’s loved ones, friends and colleagues.

When the court granted an opportunity to Changpeng Zhao, aka CZ to speak just before judgement was pronounced he expressed remorse thus, “I’m sorry”. He added that he would take responsibility for his ‘mistakes.’

CZ also admitted he failed to set up anti-money laundering AML protections and ‘know your customer’, KYC, requirements at Binance, but had since rectified those oversights.

Dozens of current and former Binance employees pleaded with Judge Jones to give Zhao a lenient sentence. Crypto entrepreneurs and investors had also shown their support for Zhao, demonstrating that he remains a powerful figure in the world of digital assets.

Justice Richard Jones paid numerous glowing tributes to the conduct of Zhao throughout the trial since last November 2023. He also referred to Zhao’s remorseful statement in court when he adjusted the submission by his defence counsel by saying that he would prefer to plead for forgiveness rather than permission.

Justice Richard Jones granted a probation of 4 months instead of 5 (five) months of probation recommended by the probation officer, and 3 years suggested by the prosecutors. He also, awarded $50 million USD for violatIon of the US Bank Secrecy Act.

According to a Forbes report, Binance also pleaded guilty to similar charges from the US Department of Justice in November 2023 and was forced to pay $4.3 billion in fines and restitution for failing to register as a money-transmitting business.

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