Binance’s Changpeng Zhao is seeking to leave the United States, ahead of his sentencing next year for his failure to maintain an effective anti-money laundering (AML) program.

Last week Binance Holdings had reached a $4.3 billion (£3bn) settlement with the US Justice Department (DoJ) to resolve its years-long criminal investigation into the world’s biggest cryptocurrency exchange.

In addition to the huge fine, co founder and CEO Changpeng Zhao, known as CZ, had “pleaded guilty to failing to maintain an effective anti-money laundering (AML) program” and resigned his leadership role at the exchange.

Settlement deal

Binance had been accused by US authorities of failing to report more than 100,000 suspicious transactions, including with organisations the US described as terrorist groups, such as Hamas, and the exchange allegedly never reported transactions with websites dedicated to selling child sexual abuse materials.

As part of the settlement agreement, Zhao had been allowed to keep his vast fortune (he is worth $10.2bn) and his shareholding in Binance, the exchange he founded in 2017, which raised questions about how much influence he would continue to exert on Binance going forward.

Zhao was born in China but is a Canadian and UAE citizen who resides in the United Arab Emirates (UAE).

He had entered his guilty plea in a Seattle courtroom last week.

But also week, US prosecutors had warned they would take a position on how much jail time to seek, closer to Zhao’s sentencing hearing in Seattle, slated for 23 February 2024.

A court filing reportedly showed that Zhao paid a $175 million bail bond, with another $15 million held in a trust account.

Zhao had agreed to return to the United States 14 days before sentencing, and has also agreed to pay a $150 million penalty to the US Commodity Futures Trading Commission.

US prosecutors in a filing last week said Zhao faces up to 18 months in prison.

But federal prosecutors were not happy at Zhao being allowed to leave the US, and last week urged a federal judge to block Zhao from leaving the continental United States prior to his February sentencing.

They said in a court filing that Zhao posed a serious flight risk despite his bail conditions.

“There is no combination of conditions sufficient to protect against the risk of flight and ensure Zhao’s return” for sentencing, the prosecutors reportedly said last week.

Zhao’s response

But now Reuters has reported that lawyers for Zhao are urging a US judge to reject the Justice Department’s request to bar him from returning to his home in the UAE until he is sentenced for violating anti-money laundering requirements.

Zhao’s lawyers in a Thursday filing asked US District Judge Richard Jones in Seattle not to reverse bail conditions set by a magistrate judge last Tuesday that would allow him to leave the US while awaiting sentencing.

The Justice Department has asked Judge Jones by Monday to reverse a decision by US Magistrate Judge Brian Tsuchida to allow Zhao to return home to the UAE ahead of his 23 February sentencing, after he agreed to release him on a $175 million bail bond.

Zhao’s lawyers argued that the former CEO had demonstrated he was not a flight risk by agreeing to a “substantial” bail package and by voluntarily coming to the US to accept responsibility for his actions.

Allowing Zhao to return to the UAE would allow him to take care of his partner and three children and prepare them for his sentencing, defence lawyers argued.

According to Reuters, the Justice Department responded in a brief on Friday that its decision at Tuesday’s hearing to recommend Zhao remain free before sentencing was “exceptional” and was only because it believed 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 reportedly said.

Tom Jowitt

Tom Jowitt is a leading British tech freelancer and long standing contributor to Silicon UK. He is also a bit of a Lord of the Rings nut...

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