Recently, US prosecutors filed a sentencing memo on Feb. 16, asking a federal judge to approve the plea deal made by Binance and its former CEO Changpeng Zhao (CZ). The deal, which was initiated in November 2023, involves Binance paying a staggering $4.3 billion as one of the largest criminal penalties in US history. Furthermore, Binance is required to be under monitoring for five years to ensure strict compliance with financial regulations.
The prosecutors argued that the substantial penalty was warranted due to Binance’s intentional violations of laws, which left the financial system exposed and vulnerable. They highlighted that Binance failed to register as a money service business and neglected to implement essential safeguards against money laundering. These actions consequently made Binance and its customers susceptible to exploitation by those looking to abuse the US financial system.
According to the prosecutors, the nature and seriousness of Binance’s misconduct, which was orchestrated by senior executives and involved hundreds of millions of dollars in collateral consequences, justified the hefty penalties imposed. Binance’s lapses also allowed terrorist groups like Hamas’ Al-Qassam Brigades, Palestinian Islamic Jihad (PIJ), Al Qaeda, and ISIS to conduct transactions on the platform. Additionally, the platform was used to facilitate transactions related to the sale of child sexual abuse materials, as well as by hackers and scammers.
As the case progresses, CZ, currently on a $175 million bail, was initially scheduled for criminal sentencing later this month. However, a federal court has recently postponed his sentencing to late April. Despite facing a potential 10-year prison sentence, CZ may only receive up to 18 months under the terms of the plea deal. Furthermore, CZ has agreed to pay a substantial $50 million fine as part of the agreement.
The repercussions of Binance’s money laundering and sanctions violations have been severe, resulting in unprecedented penalties and ongoing legal proceedings. The case serves as a stark reminder of the importance of adherence to financial regulations and the potentially far-reaching consequences of non-compliance in the realm of international finance.