Former Binance CEO Changpeng “CZ” Zhao is set to make an appearance before a federal judge after more than 160 days since pleading guilty to one felony count. The highly anticipated legal proceeding will take place on April 30, with prosecutors and CZ’s attorneys presenting their arguments in the United States District Court for the Western District of Washington. This event holds significant importance in the crypto space, similar to the conviction and sentencing of former FTX CEO Sam Bankman-Fried. Although Zhao’s sentencing hearing has been postponed once, it is expected to be held by the end of the month.
In November 2023, Zhao admitted to one count of failing to maintain an effective Anti-Money Laundering (AML) program while he was the CEO of Binance. This violated the Bank Secrecy Act. As part of the plea deal, he resigned from his position, and Binance agreed to pay $4.3 billion to settle “civil regulatory enforcement actions” in the United States. However, this settlement did not include a lawsuit from the Securities and Exchange Commission (SEC).
According to U.S. sentencing guidelines, Judge Richard Jones has the authority to sentence CZ to federal prison for up to 10 years. However, there is a recommended sentence of 12 to 18 months for the charge he is facing. On March 28, Bankman-Fried received a 25-year sentence, but apart from both cases involving high-profile figures in the crypto space, there are few similarities. It has been suggested that due to Zhao’s guilty plea and cooperation with authorities, he might not face any prison time.
Moe Vela, a former Director of Administration for then-Vice President Joe Biden, stated that while the charges in these cases may not be comparable, they demonstrate the authorities’ determination to crack down on illicit activities in the crypto space. Vela believes that U.S. authorities are trying to send a message, regardless of the severity of CZ’s sentence. However, he speculates that Zhao’s cooperation and guilty plea could lead to leniency from the judge.
Mark Bini, a former Assistant U.S. Attorney, noted that CZ’s case feels more like a regulatory offense compared to Bankman-Fried’s criminal case. However, he highlighted the potential influence of the recent Hamas attack on Israel on the judge overseeing CZ’s sentencing. Reports linking crypto to funding terrorist organizations have emerged following the attack, which could be relevant to Zhao’s charge of failure to maintain an AML program and Binance’s civil case.
Since his guilty plea, Zhao has been mostly free to travel within certain areas of the United States, thanks to a $175 million bond. His legal team has made multiple requests for him to travel to the United Arab Emirates to visit family before the hearing, but all have been denied by the judge.