Changpeng Zhao, the founder of the giant cryptocurrency exchange Binance, should go to prison for three years after breaking the law “on an unprecedented scale” and pleading guilty to a money laundering violation, federal prosecutors wrote in a court filing on Wednesday.
Defense lawyers countered in their own memo that Mr. Zhao, 47, should receive no prison time and face a sentence of probation, arguing that he had accepted responsibility for his crime and showed a commitment to philanthropy.
A federal judge in Seattle, Richard A. Jones, is set to evaluate those dueling recommendations at a sentencing hearing for Mr. Zhao on Tuesday. His sentencing will be the latest landmark in a series of criminal prosecutions that have targeted some of the most powerful figures in the global cryptocurrency industry.
Just 18 months ago, Mr. Zhao, riding high as Binance’s chief executive, helped set off the chain of events that led to the collapse of FTX, Binance’s largest rival, and the imprisonment of the FTX founder Sam Bankman-Fried, who was sentenced to 25 years for fraud. Now Mr. Zhao faces his own prison sentence after cutting a deal with prosecutors in November, admitting that he failed to set up an adequate system at Binance to prevent money laundering.
Under federal guidelines, that crime carries a sentence of 12 to 18 months, prosecutors wrote in their memo. They noted that the U.S. probation department had recommended five months behind bars for Mr. Zhao. But the government is seeking a three-year sentence, the memo said, because of the “the scope and ramifications” of Mr. Zhao’s behavior.
As Binance’s founder, Mr. Zhao was once arguably the most powerful executive in the cryptocurrency industry. At times, Binance processed as much as two-thirds of all crypto transactions. Mr. Zhao has a fortune worth $33 billion, according to Forbes.
