Finance

U.S. seeks 36-month sentence for ex-Binance CEO Changpeng Zhao

Published

9 months ago

April 24, 2024

Changpeng Zhao, founder and CEO of Binance, attends the Viva Technology conference dedicated to innovation and startups at Porte de Versailles exhibition center in Paris on June 16, 2022.

Benoit Tessier | Reuters

U.S. prosecutors are seeking an above-guidance sentence of 36 months for the former CEO of cryptocurrency exchange Binance on charges of enabling money laundering, according to a sentencing memorandum out late Tuesday.

The memorandum, which was filed with the court for the western district of Washington, states that Zhao should serve a higher sentence that suggested under advisory guidelines to “reflect the gravity of his crimes.”

Under advisory guidelines, Zhao’s sentencing would come in at a range of 12 to 18 months in prison.

“A custodial sentence of 36 months—twice the high end of the Guidelines range—would reflect the seriousness of the offense, promote respect for law, afford adequate deterrence, and be sufficient but not greater than necessary to achieve the goals of sentencing,” U.S. prosecutors said.

Zhao is accused of wilfully failing to implement an effective anti-money laundering program as required by the Bank Secrecy Act, and of effectively allowing Binance to process transactions involving proceeds of unlawful activity, including transactions between Americans and individuals in sanctions jurisdictions.

Binance has separately been sued by the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission over the alleged mishandling of customer assets and the operation of an illegal, unregistered exchange in the U.S.

This crypto cycle is different from past ones, Binance CEO says

The U.S., which separately accuses Binance and Zhao of violating the U.S. Bank Secrecy Act and sanctions on Iran, ordered Binance to pay $4.3 billion in fines and forfeiture. Zhao agreed to pay a $50 million fine.

Zhao stepped down as Binance’s CEO in November last year after reaching this plea and was replaced by the former Abu Dhabi markets regulator’s chief, Richard Teng.

Zhao was not immediately available for comment when contacted via social media platform X. Binance has yet to return a request for comment when contacted by CNBC.

‘Unprecedented scale’ of financial crime

Prosecutors say that Zhao violated U.S. law on an “unprecedented scale,” and that he had a “deliberate disregard” for Binance’s legal responsibilities.

In the memorandum of Tuesday, prosecutors said that, under Zhao’s control, Binance operated on a “Wild West” model.

“Zhao bet that he would not get caught, and that if he did, the consequences would not be as serious as the crime,” the memorandum stated.

“But Zhao was caught, and now the Court will decide what price Zhao should pay for his crimes.”

Zhao’s official sentencing is expected to take place on April 30.

New Binance CEO: Building a robust compliance program after an immature past

Finance

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Published

58 minutes ago

January 23, 2025

Business Finance News

Finance

Trump takes shot at Bank of America, revives claims of discrimination

Published

4 hours ago

January 23, 2025

Business Finance News

President Donald Trump on Thursday accused the CEOs of the two largest American banks of refusing to serve conservatives, reviving a 2024 campaign talking point that the two companies deny.

Speaking via video to an assembly held at the World Economic Forum in Davos, Trump lashed out at Bank of America CEO Brian Moynihan and JPMorgan Chase CEO Jamie Dimon as part of a question-and-answer session.

“I hope you start opening your bank to conservatives, because many conservatives complain that the banks are not allowing them to do business within the bank, and that included a place called Bank of America,” Trump said.

“You and Jamie and everybody, I hope you’re going to open your banks to conservatives, because what you’re doing is wrong,” Trump said.

Moynihan, who was among a few executives selected to ask the president questions during the Q&A, didn’t immediately respond to the accusation.

Both banks deny refusing service to conservatives.

“We serve more than 70 million clients, we welcome conservatives and have no political litmus test,” a Bank of America official said in an email.

“We have never and would never close an account for political reasons, full stop,” a JPMorgan spokeswoman said in a statement. “We follow the law and guidance from our regulators and have long said there are problems with the current framework Washington must address.”

In the aftermath of the 2008 financial crisis, caused in part by shoddy lending standards at major banks, U.S. regulators increased pressure on lenders to purge clients in industries considered higher risk for money laundering or fraud. That meant that payday lenders, pawn ships, firearms dealers, and those involved in pornography had their accounts revoked, often with little notice or explanation as to why.

As recently as October, Trump singled out Bank of America, repeating claims that it discriminates against conservatives.

The accusations may have roots in allegations from state attorneys general last year. In April, Kansas Attorney General Kris Kobach sent a letter to Moynihan, accusing the bank of canceling the accounts of “multiple religious groups with mainstream views in the last three years.”

In a May letter in response to Kobach, Bank of America said accounts are de-banked for reasons including a change of stated purpose of the account, the expected level or type of activity on the account, or failure to verify certain documentation required by law.

One account highlighted by Kobach was de-banked because it engaged in debt collection services, which was inconsistent with the Bank of America division that was servicing the account, according to the bank’s response.

“We would like to provide clarity around a very straightforward matter: Religious beliefs or political view-based beliefs are never a factor in any decisions related to our client’s accounts,” the bank said in that letter. “Bank of America provides banking services to non-profit organizations affiliated with faith-based communities throughout the United States. We have banking and investing relationships with approximately 120,000 faith-based clients in the United States.”

Influential people in Trump’s orbit have continued to claim that banks are discriminating based on religion or politics.

In November, Marc Andreessen, co-founder of the venture capital firm that bears his name, told podcaster Joe Rogan that dozens of startup founders had been de-banked in recent years. Andreesen has said he advises Trump on technology matters.

Bank of America shares were up more than 1% on Thursday, with JPMorgan shares higher as well.

The banking industry is seen as one of the biggest beneficiaries of the election of Trump, in large part because of expectations he would kill Biden-era regulatory efforts to force banks to hold tens of billions of dollars in additional capital against losses, make annual stress tests less opaque and drop efforts to cap credit card and overdraft limitations.