Lawyers for Zhao Changpeng, the founder and former CEO of the world’s biggest cryptocurrency exchange, Binance, asked a federal judge to allow him to leave the United States and return to his home in the United Arab Emirates (UAE) ahead of his sentencing on money-laundering charges.
Prosecutors also seek an 18-month prison sentence for Mr. Zhao.
Following a years-long investigation into the company’s crypto exchange operations, Binance and Mr. Zhao agreed to enter into a plea deal with a range of U.S. federal agencies, including the DOJ and the Department of the Treasury.
Binance violated U.S. anti-money laundering and sanctions laws, failing to prevent and report more than 100,000 suspicious transactions with terrorist groups that include Hamas’s Al-Qassam Brigades, Palestinian Islamic Jihad, Al-Qaeda, and ISIS, according to the Treasury Department.
Leaving US While Awaiting Sentencing
In its Nov. 20 motion, the Justice Department asked Judge Jones to reverse a decision by U.S. Magistrate Judge Brian Tsuchida to allow Mr. Zhao to return home to the UAE ahead of his Feb. 23 sentencing after he agreed to release him on a $175 million bail bond.The DOJ argued that Mr. Zhao, who holds dual citizenship in the UAE and Canada, poses a flight risk, as the United States has no extradition treaty with the UAE, so “the government would not be able to secure his return.”
He has strong connections to the UAE, as he has three children and a partner residing there. He’s also a multibillionaire with significant assets, and his bail package is “largely comprised of assets beyond the government’s reach,” according to the DOJ.
However, Mr. Zhao’s lawyers argued that the former CEO had demonstrated that he wasn’t a flight risk by agreeing to a “substantial” bail package and by voluntarily flying from the UAE to the United States “before the Court to accept responsibility and plead guilty” for his actions. He also directed his company, Binance, to plead guilty and pay a “historic” fine.
They noted that Binance “is the largest cryptocurrency platform by volume of trades in the world, and Mr. Zhao is its recognizable founder.”
“That global spotlight makes evasion of the U.S. justice system impossible,” his lawyers said.
Mr. Zhao’s defense team also argued that he might serve half of the proposed maximum 18 months imprisonment or even no jail time compared with “precedent in similar offenses.” If he flees, he risks facing additional charges.
“The fact that Mr. Zhao’s home and his family are in the UAE does not make him a flight risk, and preventing him from returning to them would be punitive,” his lawyers said.
“His family has recently grown, as he and his partner welcomed their third child a few months ago. Allowing Mr. Zhao to remain in the UAE will, in turn, allow him to take care of his family and prepare them for his return to the U.S. for sentencing.”
The Justice Department responded in a brief on Nov. 24 that its decision at the Nov. 21 hearing to recommend Mr. Zhao remain free before sentencing was “exceptional” and was only because it believed that the risk of flight he posed could be “managed” by restricting his travel.
“In the vast majority of cases, a multi-billionaire defendant who has pleaded guilty faces possible prison time and lives in a country that does not extradite its citizens to the United States would be detained,” Justice Department lawyers said.
In a separate move, on Nov. 20, the Securities and Exchange Commission announced charges against the popular San Francisco-based cryptocurrency platform Kraken for operating as an unregistered securities exchange and broker-dealer and reaping hundreds of millions of dollars in unlawful profits.
