CZ pleaded guilty to federal charges on November 21 and stepped down from his position as Binance CEO.
The sentencing date in former Binance CEO Changpeng Zhao’s money laundering case has been moved from February 23 to April 30. Zhao, also known as “CZ” in the crypto community, pleaded guilty to money laundering charges in November and faces up to 18 months in prison.
The “notice of rescheduled hearing” for the two-month delay was filed in a Seattle Federal Court on Monday.
Former US Securities and Exchange Commission (SEC) enforcement attorney John Reed Stark notes that according to sentencing guidelines in the United States, CZ could serve between 12-18 months at a minimum security prison.
A November 24 filing from the prosecution, however, suggests that Zhao could face more prison time than initially expected.
“The defense claims that Mr. Zhao faces merely a “brief” sentence and has no incentive to flee. The reality is that the top-end of the Guidelines range may be as high as 18 months, and the United States is free to argue for any sentence up to the statutory maximum of ten years,” it stated.
Nonetheless, the former CEO’s representation is likely to request no prison time or an alternative such as a combination of prison time, house arrest and probation. CZ is currently out on a $175 million bond while he awaits sentencing. His second request to leave the US for Dubai was denied when a December 29 federal court order mandated that he be barred from leaving the country.
Charging documents in the case alleged that Binance used “VIP” clients in the United States to drive its trading volume and revenue with as much as 30% of the exchange’s web traffic and about as much revenue tracing back to the US in early 2018. The documents assert that despite knowing that the exchange did not comply with US regulations, CZ did not prevent US users from accessing the exchange.
Even after the launch of Binance.US in 2019, it is reported that 16% of the main exchange’s customer base was made up of US-based users by September 2020. It is further alleged that Binance deliberately changed the “United States” part of its customer base pie chart to “UNKWN.” The firm is also said to have made employees turn a blind eye to illicit users and process their transactions if they were VIP users.
CZ pleaded guilty to federal charges on November 21, admitting failure to implement proper anti-money laundering safeguards on the platform, and stepped down from his position as Binance CEO. He was replaced by the company’s former Global Head of Regional Markets, Richard Teng. Also, as part of a plea deal, Binance agreed to pay $4.3 billion to the United States Department of Justice.
“Binance was allowing illicit actors to transact freely, supporting activities from child sexual abuse to illegal narcotics to terrorism,” Treasury Secretary Janet Yellen commented on the matter following CZ’s guilty plea.