Changpeng Zhao, founder and CEO of Binance, attends the Viva Technology conference dedicated to innovation and startups at the Porte de Versailles exhibition center in Paris on June 16, 2022.
Benoit Tessier | Reuters
US prosecutors are seeking a higher-than-guideline 36-month prison sentence for the former CEO of cryptocurrency exchange Binance on charges of enabling money laundering, according to a sentencing memorandum issued late Tuesday.
The memorandum, filed in court in the Western District of Washington, states that Chow should serve the higher sentence proposed under advisory guidelines “to reflect the seriousness of his crimes.”
Under advisory guidelines, Chow's sentence will range from 12 to 18 months in prison.
“A prison sentence of 36 months – twice the maximum of the Guidelines range – would reflect the seriousness of the crime, promote respect for the law, provide appropriate deterrence, and be sufficient but not greater than necessary to achieve the objectives of sentencing.” US prosecutors said.
Zhao is accused of willfully failing to implement an effective anti-money laundering program as required by the Bank Secrecy Act, and of actively allowing Binance to process transactions involving the proceeds of illegal activity, including transactions between Americans and individuals in sanctioned jurisdictions.
Binance has been sued separately by the US Securities and Exchange Commission and the Commodity Futures Trading Commission over alleged mishandling of customer assets and operating an illegal exchange that is not registered in the US.
The United States, which separately accuses Binance and Zhao of violating the US Bank Secrecy Act and sanctions on Iran, ordered Binance to pay fines and seizures worth $4.3 billion. Zhao agreed to pay a $50 million fine.
Zhao resigned from his position as CEO of Binance in November last year after reaching this plea and was replaced by former Abu Dhabi Markets Regulatory Authority head, Richard Teng.
Zhao was not immediately available for comment when contacted via social media platform X. Binance has not yet returned a request for comment when contacted by CNBC.
An “unprecedented scale” of financial crimes
Prosecutors say Zhao violated US law on an “unprecedented scale” and that he had a “willful disregard” for Binance’s legal responsibilities.
In a filing Tuesday, prosecutors said that under Zhao's control, Binance operated on a “Wild West” model.
“Chao gambled that he would not be caught, and that if he did, the consequences would not be as serious as the crime,” the memo said.
“But Zhao has been arrested, and now the court will decide the price Zhao must pay for his crimes.”
Chow's formal sentencing is expected on April 30.
