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Changpeng Zhao Faces 3 Years in Prison After Binance Allowed Hamas, ISIS, Al Qaeda Transactions

Changpeng Zhao's Binance "turned a blind eye" to Hamas, al Qaeda, and ISIS transactions. His friends and family have submitted letters of support to reduce his 3-year sentence

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US prosecutors are seeking a three-year prison sentence for former Binance CEO Changpeng Zhao (CZ) after he pleaded guilty to violating anti-money laundering laws.

Prosecutors filed the request on Tuesday in a Seattle federal court, arguing that imposing double the maximum 18-month sentence recommended by federal guidelines would reflect the severity of Zhao's crimes and serve as a deterrence.

"Blind Eye" Terrorism

Binance was accused by prosecutors for operating with a "Wild West" approach that enabled criminal activity. The exchange failed to report transactions 100,000 suspicious transactions involving designated terrorist groups such as Hamas, al Qaeda, and the Islamic State of Iraq and Syria (ISIS).

Treasury Secretary Janet Yellen said Binance "turned a blind eye" as it allowed these terrorist organizations to use the platform.

The world's largest crypto exchange is also accused of facilitating the sale of child sexual abuse materials.

"He made a business decision that violating U.S. law was the best way to attract users, build his company, and line his pockets," prosecutors said.

Zhao's defence highlighted his acknowledgement of responsibility as a first-time offender and his payment of a $50 million criminal fine, which he paid in November 2023.

At the time, the US Justice Department slapped a $4 billion fine as a resolution to the long-standing investigation into the world's largest crypto exchange. Former MAS Director Richard Teng has since taken over as CEO of Binance.

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Zhao has remained free on a $175 million bond and has agreed not to appeal any sentence within federal guidelines. He will be sentenced on 30 April.

Zhao Apologises

In the letter addressed to the U.S. Judge from the Western District of Washington, Richard A. Jones, Zhao said, "There is no excuse for my failure to establish the necessary compliance controls at Binance.” He added that this would be his only “encounter with the criminal justice system.”

Looking ahead, Zhao said he is looking to support biotech startups and youth projecst. In March, he announced his new venture Giggle Academy. "Building a high-quality and sticky education platform that is entirely free and accessible to all is the most impactful thing I could do for the next chapter of my life," Giggle Academy quotes CZ as saying.

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161 other letters of support were also submitted to the judge from family, friends and others.

Jessica Zhao, his sister and former Managing Director of Morgan Stanley, said her brother does well for others despite his mistakes, citing FTX as an example.

Binance co-founder and He Yi, who is also the mother of CZ's three children, said, “If the cryptocurrency industry is compared to the Wild West, then CZ is the guardian of this wilderness.”

“Even the U.S. has not decided how to regulate and define this industry,” Yi wrote. "As a founder who has never managed a company of this size, he was sure to encounter blind spots.”

CZ's wife, Yang Weiqing, highlighted how Binance donated tens of millions of yen to the disaster-stricken areas of Japan in 2018, even though the exchange withdrew from Japan in the months prior.

Rachel and Ryan Zhao, CZ's children, also offered anecdotes of their supportive father, pleading with the Judge not to limit Zhao's character to one incident.

Other letters of support came from Tigran Gambaryan, Binance’s Head of Financial Crime Compliance and a former special agent in the U.S. Department of Treasury, Max S. Baucus, former U.S. Ambassador to China, Professor Jeremy R. Cooperstock, McGill University, Associate Professor Ronghui Gu, Columbia University, Morgan Stanley Managing Director Sean Yang, and members of the ruling family in the United Arab Emirates.

Meanwhile, Binance executive, Tigran Gambaryan, will remain in Nigerian custody until 17 May 2024 as per an Abuja court's ruling. He will spend his 40th birthday in a Nigerian prison.

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Gambaryan and Binance's regional manager for Africa, British Kenyan Nadeem Anjarwalla, were detained in Nigeria in February. The pair visited the country in to address allegations that the exchange's activity had crashed the country's national currency, the naira.