Changpeng Zhao, the person who started Binance, the biggest cryptocurrency exchange globally, will learn his punishment on Tuesday in a Seattle court. American prosecutors want him to spend three years in prison for letting lots of money laundering happen on his platform.
Zhao admitted he was guilty and gave up his position as Binance CEO in November. His company also agreed to pay $4.3 billion to settle the claims. U.S. officials say Zhao knew about illegal activities like child sex abuse, drug dealing, and terrorism funding but chose to ignore them.
“He decided breaking U.S. laws was the best way to grow his company and make money,” said the Justice Department in a statement.
Zhao’s lawyers argue he shouldn’t go to prison, pointing out that he flew from the United Arab Emirates to the U.S. to admit his guilt, even though there’s no extradition deal between the two countries. They also mention that no one has been jailed for similar crimes before.
“I want to own up to my mistakes and move on,” Zhao said during his guilty plea. “I want to return. Otherwise, I wouldn’t be here today.”
However, prosecutors argue that Zhao’s actions were much worse than others who broke the law. They’re asking for a three-year jail term, which is twice the usual punishment.
Binance allowed over 1.5 million trades of virtual currency worth nearly $900 million, breaking U.S. sanctions, including deals with groups like Hamas’ al-Qassam Brigades, al-Qaeda, and Iran.
Zhao knew Binance had to follow anti-money laundering rules but told the company to hide customers’ locations in the U.S. to avoid obeying the law, according to prosecutors.
The cryptocurrency industry has seen many scandals and market crashes. Recently, Nigeria has accused Binance and two executives of money laundering and tax evasion.
Zhao was once a rival to Sam Bankman-Fried, the founder of FTX, the second-biggest crypto exchange before it collapsed in 2022.
Bankman-Fried was found guilty of fraud in November and got a 25-year prison sentence for stealing at least $10 billion from customers and investors.
Zhao and Bankman-Fried used to be friendly competitors, with Binance even investing in FTX when it started in 2019. But their relationship soured, leading Zhao to sell all his cryptocurrency investments in FTX in early November 2022. FTX filed for bankruptcy a week later.
