Zhao, Binance Founder Faces Prison: Lawyers Weigh In

In a high-profile court case, Changpeng Zhao, founder, and former CEO of Binance, faces the Seattle courtroom today to learn his fate regarding the crimes he admitted to committing. As reported by The Information, the outcome of this hearing will determine whether Zhao, also known as CZ, will face an extended prison sentence.

Zhao's guilty plea in November for enabling money laundering at Binance prompted his agreement to step down as CEO. However, U.S. District Judge Richard Jones is now deliberating on the appropriate punishment.

Once a crypto sector titan, Zhao transformed Binance into the world's largest centralized crypto exchange, amassing assets exceeding $65 billion by the time of his resignation. However, unlike its rival FTX, which collapsed into bankruptcy following founder Sam Bankman-Fried's criminal charges, Binance continues to operate.

Prosecutors have accused Zhao of violating U.S. law on an "unprecedented scale," alleging his deliberate disregard for Binance's legal responsibilities. The exchange operated under what prosecutors described as a "Wild West" model. 

Despite the ongoing legal battles, Binance's market share has seen a decline in recent months. The exchange processed a staggering $18.1 trillion worth of trading volume in 2023, with a notable portion attributed to derivatives trading, a vital aspect of its business.

As part of his plea deal, Zhao agreed to pay a $50 million fine, in addition to the $4.3 billion in fines and forfeiture that Binance was ordered to pay for violating the U.S. Bank Secrecy Act and sanctions on Iran. The sentencing hearing today will determine the final outcome for Zhao, with prosecutors requesting a three-year sentence, double the high end of the guidelines range.

While Zhao's lawyers have advocated for probation and no jail time, more than 160 of his supporters, including family members, Binance customers, and Emirati royalty, have appealed for leniency to the court. However, former federal prosecutors and legal experts anticipate a sentence ranging from a year to a few years.