A Circuit Court Denied by the US Attorney General David H. Zhao, a Crypto Figurehead, and a High-Sensitive Judge
The fine of $50 million is far lower than the estimated $33 billion fortune he made with Binance. He would not appeal any of the sentences up to 18 months.
According to prosecutors, the company allowed sanctions violations that totaled almost $1 billion, and they broke US law on an unprecedented scale. In the US, Zhao and other executives did not comply with laws including the Bank Secrecy Act. The result was that at least $1.1 million was transacted with US customers by Iranian customers in violation of sanctions. Cuba and Syria were among the countries which were able to make transactions.
Richman says that the judge would have had a hard time judging him because of his disregard for the law and his willingness to plead guilty and take responsibility. The judge will likely impose a long sentence on the person for breaking the law in such a way.
Zhao is the second crypto figurehead to face criminal sentencing in the US in as many months. On March 28, Sam Bankman-Fried, who founded FTX, was sentenced to 25 years in prison. The pair battled for control of the exchange market, which they eventually fell in love with. But the similarities between the cases end there.
The judge was required to look past the guidelines and consider the context of the underlying crime, according to Daniel Richman, professor of law at Columbia University and former federal prosecutor. That includes the character of the defendant, the likelihood of recidivism, past infractions, and other factors.
In a letter to the judge before the hearing, he apologized and took responsibility for the failure to develop an effective compliance program. Words can’t explain how deeply I regret my choices that lead to me being before the court. Please accept my assurances that this will be my only experience with the criminal justice system.
Daniel Silva is an attorney at the law firm, and a former US prosecutor. CZ was found guilty of violating the law as required by a financial institution executive. He was improper use of customer funds and gained through fraudulent statements and material omissions of fact.
In their own presentence filing, Zhao’s counsel made a thinly-veiled reference to the distinction. “Mr. Zhao has been convicted only of an AML [anti-money-laundering] compliance failure,” they wrote. He has not cheated investors, nor has he misappropriated customer funds. They looked like they were saying that their client was not a SBF.
The conviction will still be celebrated by the DOJ, which has only secured a few landmark convictions in the past. “Whether people criticize the sentence as too light, it sends a healthy message,” says Silva. The aim is to “deter the next crypto or financial institution CEO from thumbing their nose at anti-money-laundering regulations.”
Judge Richard Jones handed down a lighter sentence than the prosecution requested on Tuesday during the sentencing hearing in the Western District of Washington.
