The U.S. Probation Office recommends that Zhao Changpeng be sentenced to five months of probation. Bloomberg: CZ will become the richest person serving a sentence in U.S. history

News on April 29, according to CoinDesk, court documents show that although the Department of Justice requested that former Binance CEO Changpeng Zhao be sentenced to 36 months in prison and fined $50 million. But the probation office recommended five months of probation in its presentation report. The defense also asked for house arrest and probation instead of jail time.

If a Seattle judge agrees with prosecutors and orders CZ incarcerated, he will become the richest man ever to serve time in a U.S. federal prison for his ownership of Binance and his involvement in Related personal wealth of approximately $43 billion was not affected. As Binance’s business grows amid crypto’s new bull run, CZ’s wealth may increase further. Furthermore, Binance and CZ are in very different situations than FTX and SBF. After the conviction, SBF was sentenced to 25 years in prison, and his current net worth is estimated to be $0; the crimes charged by the Department of Justice against Binance did not include deceiving customers about the use of funds. (Bloomberg) Yesterday, court documents showed that although the Department of Justice requested that CZ be sentenced to 36 months in prison and fined $50 million. But the probation office recommended five months of probation in its presentation report. The defense also requested house arrest and probation without jail time.

Tama Kudman, a partner at Kudman Trachten Aloe Posner LLP, said the Justice Department's request for a longer sentence seemed to be sending a strong message. The U.S. Department of Justice has been working to crack down on money laundering through cryptocurrencies, and Changpeng Zhao has been "pretty blatant in terms of anti-money laundering regulations."

Here are the detailed reports:

Former Binance CEO Changpeng Zhao now faces the real possibility of serving three years in a U.S. federal prison — much higher than the 18 stipulated in his plea agreement months.

Zhao's sentencing hearing will be held on Tuesday, giving the U.S. Department of Justice (DOJ) and his defense attorneys a chance to argue how long Zhao should serve after pleading guilty in November to one count of violating the Bank Secrecy Act. . While the plea agreement released in November allowed Zhao to appeal any sentence longer than 18 months, the Justice Department requested 36 months in a sentencing memorandum released last week (Zhao cannot appeal a sentence shorter than 18 months). ). The defense asked for house arrest and probation, with no jail time. In its briefing report, the probation office recommended five months of probation, according to defense filings last week.

Kudman Trachten Aloe Posner LLP partner Tama Kudman said the Justice Department’s request for a longer sentence seemed to be sending a strong message. The U.S. Department of Justice has been working to crack down on money laundering through cryptocurrencies, and Zhao has been "very blatant about anti-money laundering rules."

"The government wants to ensure these lower guidelines do not give anyone the comfort of being able to breach our anti-money laundering initiatives at will," she said.

Kudman said that while the longer sentence may initially surprise the cryptocurrency industry, it does not mean the Justice Department will renege on its firm agreement to only recommend a maximum of 18 months.

"Generally speaking, when we negotiate a defense, we negotiate things like the amount of damages and what arguments each side can retain," she said. "I don't see anything in this document that indicates they are limited to 18 months."

It goes both ways, she said: The Justice Department retains the ability to argue for a longer sentence than the guidelines recommend , but it's also a way the defense can argue for a much shorter sentence than what the guidelines recommend.

The U.S. Department of Justice noted in its filing that large amounts of money were flowing through Binance without proper “know your customer” or anti-money laundering checks.

Zhao's lawyers, with the support of family and friends, argued that he had repented of his crimes, had tried to rectify the situation and would not reoffend, so he should not be in prison at all. Instead, they argued that house arrest and probation would satisfy the needs of justice.

Either way, the decision now rests with the judge, who has broad discretion. He could accept or reject either side’s arguments about the importance of deterrence and what kind of sentence would adequately deter potential future criminal behavior by Zhao Yun and other members of the cryptocurrency community.

Another attorney, who could not comment publicly on the case, agreed that it is not unusual for prosecutors to ask for a different sentence than what the guidelines calculate.

Former FTX CEO Sam Bankman-Fried is one example - his prison sentence guidelines calculated at more than 100 years, but prosecutors asked for 50 years. The judge sentenced him to 25 years in prison.

"This also occurs when guidelines are viewed as non-punitive. This often occurs because the BSA's guidelines are relatively low and do not take into account aggravating circumstances," they said. It added that they were not surprised that "there is a whiff of sanctions violation behind the formal BSA charges."

The biggest example of how Zhao’s hearing went is the case of former BitMEX CEO Arthur Hayes. Like Zhao, Hayes was charged with violating the Bank Secrecy Act and pleaded guilty. Hayes was sentenced to six months of house arrest and two years of probation by the judge overseeing the case.

The second lawyer said that while Zhao has the ability to appeal the longer sentence, he would have difficulty succeeding. They say circuit courts rarely overturn district court decisions, even if they are excessive.

“Parties want to be free to recommend whatever they want,” Cudman said. "Every negotiation in every situation has its own different style and different focus." She also doesn't think the Justice Department acted in bad faith here. It would be a sign of dishonesty if the Justice Department failed to disclose its position during plea negotiations.

But the second attorney said the Justice Department has nothing to lose in asking for a longer sentence in that regard, although other attorneys who may be involved in future plea deals will certainly be watching.

The Justice Department may recommend that Zhao should not receive credit for taking responsibility.

"In a sense, experienced white-collar attorneys will follow this plea agreement and they will use it in future negotiations, which is why for a defendant with a long history, this It's [bizarre] that the numbers are so low," the lawyer said. "This will be referred back to the Justice Department."

Still, Zhao's inclusion will win goodwill from the system, a second lawyer said. Part of that is in the plea agreement itself: "He did not plead guilty to sanctions violations, which is a huge favor to him." .

Zhao may also receive credit from the judge for these same actions and for complying with the terms of his bail — even if those terms were modified.

"There's a world of difference between someone trying to evade capture and someone coming forward to plead guilty, and he's going to get a huge amount of credit," the second attorney said.

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