A recent recommendation by the U.S. Department of Justice [DOJ] for Changpeng Zhao, the founder of Binance has caused uproar in the market. CZ pleaded guilty to violating the Bank Secrecy Act last November. This further prompted his resignation as Binance’s chief executive. The exchange also admitted to the violations which resulted in a substantial penalty of $4.32 billion. Now, as Zhao faces sentencing on April 30, the DOJ was seen pushing for 36 months in prison alongside a $50 million fine.
The severity of the recommended sentence is notable for several reasons. One of them is that federal sentencing guidelines typically cap the maximum prison term at 18 months for violations of this degree. However, the DOJ argues that Zhao’s misconduct was not only willful but also had a wide range of ramifications. The latest filing read,
“The sentence in this case will not just send a message to Zhao but also to the world. Zhao reaped vast rewards for his violation of U.S. law, and the price of that violation must be significant to effectively punish Zhao for his criminal acts and to deter others who are tempted to build fortunes and business empires by breaking U.S. law.”
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Debating DOJ’s Stance
While the DOJ puts forth the magnitude of Zhao’s violations, several critics of the regulator have been highlighting CZ’s contributions to the industry. Binance, for instance, emerged as one of the largest and most influential exchanges across the globe. This was under CZ’s leadership.
In addition to his potential situation, Zhao’s personal circumstances add complexity to the whole scenario. This includes his inability to return to Dubai where his family resides. The postponement of his sentencing hearing from late February to April 30 further prolongs the uncertainty around his fate.
Just last week, Binance’s co-founder He Yi instilled hope in the market by suggesting that CZ’s situation in the U.S. is perceived to be relatively stable. However, the looming prospect of a lengthy sentence casts a shadow over Binance and the entire cryptocurrency market.
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