Binance’s billionaire founder to find out if prison time is coming — here’s what lawyers are expecting
Zhao Changpeng, founder and chief executive officer of Binance, attends a conference at Porte de Versailles exhibition center in Paris, France June 16, 2022.
Benoit Tessier | Reuters
Changpeng Zhao, the founder and former CEO of crypto exchange Binance, heads to a Seattle courtroom on Tuesday to learn whether the crimes he admitted to committing will land him in prison for an extended sentence.
In November, Zhao pleaded guilty to enabling money laundering at Binance. As part of his plea deal with the Department of Justice, Zhao agreed to step down as CEO. For months, U.S. District Judge Richard Jones has been weighing the appropriate punishment for Zhao, also known as CZ.
Once a titan of the crypto sector, Zhao grew Binance into the world’s largest centralized crypto exchange globally. The company held assets of more than $65 billion by the time he stepped down. Unlike rival exchange FTX, which collapsed into bankruptcy when founder Sam Bankman-Fried was criminally charged, Binance has continued to operate.
Assets on the Binance platform totaled more than $122 billion, according to blockchain data firm Nansen, a roughly 88% jump that follows a sharp increase in crypto prices in recent months.
Prosecutors say Zhao violated U.S. law on an “unprecedented scale,” according to their sentencing memorandum to the court, and that he showed a “deliberate disregard” for Binance’s legal responsibilities, operating the exchange on a “Wild West” model.
Zhao is accused of willfully failing to implement an effective anti-money laundering (AML) program as required by the Bank Secrecy Act, and of allowing Binance to process transactions involving proceeds of unlawful activity, including between Americans and individuals in sanctioned jurisdictions.
Binance processed a whopping $18.1 trillion worth of trading volume in 2023, according to data from CCData, a crypto market data firm.
Around 80% — or $14.4 trillion — of that came from derivatives products like futures contracts, while the remaining $3.7 trillion came from spot trading. Derivatives trading is a key part of Binance’s business.
Zhao has 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 action was a joint effort by the Justice Department, the Commodity Futures Trading Commission and the Treasury Department, while the SEC, which brought its own suit against the exchange, was notably absent.
The government is asking for a sentence of three years, double the high end of the guidelines range to “reflect the gravity of his crimes,” the prosecutors’ memo says.
Zhao’s lawyers have asked for five months’ probation. They say Zhao has accepted responsibility for dodging AML requirements, and that he has a history of philanthropy and community service. Additionally, he’s already spent more than five months in the U.S., away from family, since pleading guilty.
More than 160 of Zhao’s supporters, including family members, Binance customers, and Emirati royalty, have written notes to the court to appeal for mercy.
Prison time likely
Most experts who spoke to CNBC about the upcoming sentencing predict Zhao will spend some time behind bars.
“This is a high-profile case and the judge will feel pressure not to be soft during sentencing,” Former federal prosecutor Neama Rahmani told CNBC. He expects a sentence of a year or two.
Braden Perry, a former senior trial lawyer for the CFTC, said federal sentencing guidelines provide a framework but allow judges some discretion.
“For CZ, a first-time nonviolent offender, the sentencing guidelines call for an advisory range of 10 to 16 months,” said Perry, currently a partner at law firm Kennyhertz Perry.
Working in Zhao’s favor, Perry said, is that the defendant never went to trial, saving judicial and prosecutorial resources, and that he accepted responsibility and settled with multiple agencies, all concessions that might influence the judge’s decision.
“I believe the judge will acknowledge the vast scale of potential suspicious transactions and the prior lax AML program but recognize the efforts and remediation taken,” Perry said. “Taking into account all the factors, I predict a guideline sentence with a term of incarceration. This will deter yet account for the guilty plea and all other factors used in the sentencing decision.”
Yesha Yadav, law professor and associate dean at Vanderbilt University, is looking for the judge to impose a sentence “in the low single digits – perhaps three years.” However, that could include minimal time in prison and the rest on probation.
Yadav suggested that Zhao will benefit from Binance’s contrast to FTX, which was “revealed to have been a criminal enterprise.“
“While Binance has been convicted of extremely serious charges, it still remains an operational, albeit weakened, business that continues to attract customers and is looking to revive its fortunes by focusing on compliance under a monitorship regime,” Yadav said.
Former federal prosecutor Paul Tuchmann also expects some prison time due to the failure to implement AML requirements, as well as the volume of funds that flowed through Binance without being subject to such controls.
“While he is a first-time offender, those factors I just mentioned are likely to outweigh the lack of criminal history,” Tuchmann said. “The need for general deterrence in the crypto industry, and the financial sector generally, is so great, that I assume that DOJ will take the position, and a judge will likely agree, that a message needs to be sent through this sentence that the consequences for violating these rules can’t just be seen as a cost of doing business.”
Los Angeles corporate law attorney Tre Lovell said a shorter sentence, in the range of five to seven months, is likely, along with extended probation.
Lovell added that, unlike Bankman-Fried, who was convicted of fraud and sentenced to 25 years in prison, Zhao hasn’t been charged with fraud or other crimes deserving of a longer sentence.
“In addition, his letter to the judge does reflect remorse, discusses his making of poor decisions, and indicates that the Binance platform has instituted strict anti-money laundering controls at his direction,” Lovell said.
David Weinstein, a former federal and state prosecutor who now practices as a corporate compliance and white collar defense attorney at Jones Walker, said prison sentences represent an important deterrent.
“I think the sentence will end up just under a year,” he said.
WATCH: Bankman-Fried sentencing
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Jason and Emilio talk about some of the choices they made to make the Honda Prologue and Acura ZDX feel different from its GM-branded cousins, and explain why this was much more than a case of badge-engineering. Give it a listen, then let us know what you think of the Prologue and ZDX in the comments.
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Read more: All my favorite EVs, racecars, and robots from Electrify Expo Austin.
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The first EV charging hub funded by the Charging and Fueling Infrastructure (CFI) Program in the Eastern US is now online in Deerfield, Massachusetts.
The town installed the region’s first DC fast chargers (four ports), along with four Level 2 chargers, at 59 North Main Street in South Deerfield.
These new charging stations, funded with $2.46 million from the CFI program, are conveniently located near Interstate 91 in Franklin County, the most rural county in Massachusetts, which serves drivers from Connecticut up to the Canadian border.
The hub also features local and regional bus stops and designated bike lanes with secure onsite bike racks. The chargers are meant to cater to everyone: from local residents and visitors to municipal EVs and commercial vehicles that service the region’s businesses, like those in food and beverage manufacturing.
Gabe Klein, executive director of the Joint Office of Energy and Transportation, sees this as a model for future projects:
Multi-modal charging hubs in communities are key to giving more people the choice to ride and drive electric. The Town of Deerfield is showing leadership in building out convenient charging infrastructure that brings new transportation choices to rural and disadvantaged communities while supporting local commerce.
In recent years, Deerfield has experienced increased climate change-driven flooding from nearby rivers, including the Deerfield River, the Connecticut River, and the Bloody Brook. The project incorporates environmental engineering designed to mitigate and adapt to the effects of flooding and climate, including the installation of permeable asphalt and rain gardens, planting of native trees, grasses, and shrubs, and the creation of new greenspace in the center of Deerfield.
The Biden-Harris administration’s CFI Grant Program is expanding EV infrastructure nationwide. It offers grants for projects that complement and expand upon the initiatives of the NEVI program in urban, rural, and disadvantaged and low-income communities. So far, the CFI Grant Program has allocated over $1 billion to nearly 100 projects across the US, encouraging private investments and expanding the EV charging network to make EV ownership more practical and convenient.
Read more: The US reaches milestone of 200,000+ public EV charging ports
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Kia’s upcoming EV4 electric sedan was just spotted testing in the US for the first time. The low-cost EV is expected to make its big debut by the end of the year. Here’s a look at the new model.
The EV4 will round out Kia’s new “EVs for all” master plan launched last year. Kia showcased three new models, the EV3, EV4, and EV5, during its first annual EV Day in October 2023.
During the event, Kia outlined its new global strategy to “lead and accelerate the EV revolution” with a wide range of models priced from $30,000 to $80,000.
Kia plans to rapidly expand its lineup with a series of smaller, lower-priced models. It launched the EV9, its first three-row electric SUV, which is already proving to be a hot seller in the US. Starting at under $55,000, the EV9 is still a great deal compared to others in its class, but Kia plans to go even lower.
The EV3 and EV4 are expected to be among the most affordable electric vehicles when they arrive in the US.
Kia’s new EV4 is now testing in the US
Ahead of its official debut, Kia’s new EV4 sedan was recently caught driving on US streets for the first time.
The latest image from KindelAuto doesn’t reveal much more than what’s been shown in the past, but the fact that it’s now testing in the US is significant.
Kia’s EV3 is already on sale in Korea, starting at around $30,000 (42.08 million won). Earlier this week, the company said its new compact SUV is now available across Europe, starting at around $38,000 (36,000 euros) with a “segment-leading range” of up to 375 miles (WLTP).
Next up will be the EV4. Kia is expected to officially reveal the new EV by the end of the year, with deliveries starting in 2025. It could be as soon as next week at the 2024 LA Auto Show.
The interior will feature Kia’s advanced new ccNC infotainment system with dual 12.3″ navigation and driver display screens. An otherwise minalimalistic design is expected inside.
Kia’s EV4 will also be available in a hatchback variant. Although the hatch is likely aimed at European buyers, it was also recently spotted testing in the US for the first time.
We will learn official prices closer to launch, but the EV4 is expected to start at around $35,000 to $40,000.
Kia is teasing five new vehicles for the US, at least one being a new EV, that will debut at the LA Auto Show next week. Will it be the EV3? EV4?
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