In a surprising development, Changpeng Zhao [CZ], the founder and former CEO of Binance, has been granted release from custody. This was done through a substantial $175 million personal recognition bond. This comes in the aftermath of his admission of guilt for violating the Bank Secrecy Act, causing a ripple effect in the cryptocurrency community. The accusations against CZ revolve around allegations of instructing Binance to permit U.S. customers onto the platform without conducting the requisite know-your-customer or anti-money laundering checks.
Terms of Release
The conditions for Zhao’s release are stringent, mirroring the gravity of the charges against him. As per court records, he is obligated to deposit $15 million into a trust account held by Davis Wright Tremaine. This is separate from the bond. Additionally, CZ has committed to forfeiting funds if he breaches the terms of his release. This further encompasses refraining from unlawful activities, interference with witnesses or victims, and the avoidance of non-prescribed controlled substances.
Two guarantors have come forward, pledging amounts of $250,000 and $100,000, respectively. It provides an additional layer of assurance for the court. However, the release order also permits CZ to leave the U.S., contingent upon his return 14 days before his scheduled sentencing. Additionally, it should be noted that this is a provision that federal prosecutors aim to contest.
Legal Implications for Binance
CZ’s admission of guilt aligns with his resignation from Binance. The cryptocurrency exchange, established by CZ in 2017, has entered into a settlement with the U.S. Department of Justice. The settlement terms mandate Binance to pay an unprecedented $4.3 billion in penalties to various federal agencies. It constitutes one of the largest penalties ever imposed on a corporate defendant in a criminal case, as emphasized by Attorney General Merrick Garland in a press conference.
Furthermore, Binance has consented to the appointment of multiple monitors to supervise its operations for the next five years. It is resolving charges not only with the DOJ but also with the Financial Crimes Enforcement Network (FinCEN), the Office of Foreign Asset Control (OFAC), and the Commodity Futures Trading Commission.
Also Read: US Government Files Criminal Charges Against Binance
CZ’s Future and Potential Ramifications:
Despite the agreement between CZ and the DOJ, uncertainties persist regarding his future. A sentencing hearing is slated for Feb. 23, 2024, at 9 a.m. Pacific Time. Significantly, CZ has relinquished his right to appeal any sentence exceeding 18 months as part of the agreement. While the DOJ and CZ have concurred on a $50 million fine, the absence of any reference to imprisonment raises questions.
Should CZ fail to appear in court as outlined in the appearance bond document, he could face a maximum of 10 years’ imprisonment and a substantial fine of $250,000. The document stipulates that the U.S. will seek a review of the bail order. Furthermore, the effective date is set for Nov. 27. If a district judge denies the review, Zhao will be allowed to depart the U.S. pending the judge’s decision.
Also Read: Former Binance CEO Changpeng Zhao Faces 18 Months in Prison