Binance founder Changpeng Zhao, better known as CZ, is facing a proposed sentence of 36 months in prison for violating anti-money laundering laws, according to a recent court filing by U.S. prosecutors. This comes after Binance and CZ himself pleaded guilty to these charges.
CZ’s Defense and Legal Arguments
CZ’s defense strongly claims that he was unaware of the illegal transactions on his platform. They argue that such transactions represented only a tiny fraction of the exchange’s total trading volume, describing the likelihood of CZ’s deliberate involvement as ‘inconceivable.’
The defense insists that a probation sentence would be more appropriate than prison time due to his lack of prior knowledge and the non-repetitive nature of these incidents.
They explained that while Binance’s chief compliance officer had warned CZ about the presence of users from US-sanctioned countries, as a non-U.S. company, Binance was not prohibited from serving these users.
Legal Consequences and Global Impact
The charges to which Binance has responded involve a novel legal interpretation: Their automated systems unintentionally facilitated transactions between users in sanctioned countries and the US, a scenario never legally contested before Binance.
In their plea, CZ and Binance have agreed to some big repercussions beyond the courtroom. Alongside the criminal charges, Binance has agreed to pay a fine of $4.3 billion. They are also required to work under the oversight of a court-appointed monitor.
The ongoing legal proceedings have had personal repercussions for CZ. Originally scheduled for sentencing in late February, the hearing has been pushed to April 30. Since his court appearance in Seattle, CZ has been unable to return to Dubai, where his family resides.
Amidst these developments, Binance is facing regulatory scrutiny elsewhere. The Philippines Securities and Exchange Commission has recently taken steps to limit the exchange’s operations within its jurisdiction.
On April 23, the SEC announced collaboration with Google and Apple to remove Binance’s apps from their stores, citing the protection of local investors as a primary concern.
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