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Changpeng Zhao, the founder and former CEO of the world’s largest cryptocurrency exchange, Binance, must remain in the United States of America for the foreseeable future.
On Monday, a federal judge ruled that Zhao must remain in the US until his sentencing, which is scheduled to be held in February.
Zhao Cannot Leave For Now
US District Judge Richard Jones ruled in favor of the prosecution, who argued that there was a substantial risk that Zhao would flee if he were allowed to return to his home in the United Arab Emirates (UAE). The prosecution further argued that the United States does not have an extradition treaty with the UAE, effectively putting Zhao out of reach were he to leave US soil.
However, lawyers for Zhao argued that he was not a flight risk and pointed out that he came to the United States of America voluntarily to cooperate with the authorities and take responsibility for his and Binance’s actions. The former Binance CEO is a citizen of both the UAE and Canada.
Federal prosecutors had been attempting to stop Zhao from leaving the US. Zhao is on a $175 million release bond, which allowed him to return to his home in the UAE, provided he returns fourteen days before his sentencing in February 2024. Prosecutors had requested a review of the bond and the judge’s decision to allow Zhao to return to the UAE in a filing on the 22nd of November.
“After Magistrate Judge Tsuchida’s ruling on this issue, the government gave notice that it would seek review of that decision based on the substantial risk of flight posed by Zhao. Accordingly, the government now respectfully files this motion for review of Magistrate Judge Tsuchida’s decision by the Court and requests that the Court order that Zhao should not be permitted to return to the UAE before sentencing.”
The Charges Against Zhao
Changpeng Zhao pleaded guilty to charges last week as part of a $4 billion settlement with federal regulators. As part of the settlement, Zhao also stepped down as Binance’s CEO. The settlement was made with multiple regulatory and federal bodies, including the Justice Department, the Treasury Department, and the Commodity Futures Trading Commission (CFTC), which claimed that Binance failed to prevent or act against suspicious transactions with terrorists.
The government stated that a multi-year investigation into Binance had revealed that the platform allowed bad actors linked to a number of illegal activities, to operate on the platform. The investigation also revealed that Binance did not have any protocols in place to flag and report transactions that involved money laundering. The DOJ even claimed that staff at Binance were aware of these malpractices.
“Binance turned a blind eye to its legal obligations in the pursuit of profit. Its willful failures allowed money to flow to terrorists, cybercriminals, and child abusers through its platform. Today’s historic penalties and monitorship to ensure compliance with US law and regulations mark a milestone for the virtual currency industry. Any institution, wherever located, that wants to reap the benefits of the US financial system must also play by the rules that keep us all safe from terrorists, foreign adversaries, and crime or face the consequences.”
Zhao admitted that he had made mistakes in a post on X, adding that he must take responsibility for his actions and do what’s best for the community, Binance, and myself. The settlement is part of a larger crackdown on cryptocurrency exchanges. Apart from Binance, rival exchanges Coinbase and Kraken have also been named in lawsuits filed by the United States Securities and Exchange Commission. The SEC has alleged that Kraken and Coinbase failed to register as securities exchanges before offering securities to their customers. Prosecutors have also taken action against FTX founder Sam Bankman-Fried following the collapse of the exchange.
Other Charges Against Zhao And Binance
The settlement with Binance and Zhao comes after charges were filed against the exchange and Zao, alleging misuse of customer funds. Authorities also alleged that customer funds were diverted to another trading entity controlled by Zhao. The exchange was also accused of moving billions of dollars to another company owned by Zhao.
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