Ex-Binance CEO Changpeng Zhao faces 3 years for money laundering

Former crypto kingpin Changpeng Zhao may soon share a cell with FTX fraudster Sam Bankman-Fried — and if the feds get their way it will be for three years.

US prosecutors recommended an above-guidance, 36-month sentence for the disgraced Binance chief after the founder of the world’s largest cryptocurrency exchanges pleaded guilty to money laundering charges.

Prosecutors asked for the longer penalty in a sentencing memo filed with the court for the western district of Washington late Tuesday to “reflect the gravity of his crimes,” CNBC reported.

Zhao — who had called Bankman-Fried a “liar” and said he had knowingly misappropriated customers’ money — would still serve far less time than the 25 years handed to his rival for the FTX fraud.

US authorities have said Binance and Zhao — who is also a citizen of Canada — failed to report more than 100,000 suspicious transactions with designated terrorist groups including Hamas, al Qaeda and the Islamic State of Iraq and Syria, or ISIS.

They called the company’s operations the “Wild West” under Zhao’s rule, adding that Binance violated US laws on an “unprecedented scale” and with a “deliberate disregard” for the company’s legal responsibilities, CNBC reported.

Prosecutors said Binance’s platform also supported the sale of child sexual abuse materials and was a recipient of a large portion of ransomware proceeds.

As a result, “a custodial sentence of 36 months — twice the high end of the Guidelines range — would reflect the seriousness of the offense, promote respect for law, afford adequate deterrence, and be sufficient but not greater than necessary to achieve the goals of sentencing,” US prosecutors said.

“Zhao bet that he would not get caught, and that if he did, the consequences would not be as serious as the crime. But Zhao was caught, and now the Court will decide what price Zhao should pay for his crimes.”

Zhao, 47, has been free on a $175 million bond — and was barred by a federal judge late last year from leaving America, rather than returning to United Arab Emirates, where he is a citizen.

He is slated to be sentenced on April 30 in Seattle.

Zhao had agreed not to appeal against any stretch of prison time up to the maximum federal sentencing guidelines of 18 months.

He stepped down as Binance’s chief last November, when he and the exchange admitted to the violations, and the firm agreed to a penalty of $4.32 billion.

Zhao also agreed to pay $50 million at the time, upon ceasing his involvement with Binance, which he founded in 2017.

The crypto firm’s penalty, meanwhile, included a $1.81 billion criminal fine and restitution of $2.51 billion.

Zhao, commonly known as “CZ” in crypto circles, was a key player in the dramatic collapse of FTX.

Binance was reportedly in talks to buy out FTX prior to its stunning implosion in November 2022 — but then pulled out and sold its holdings in FTT, the digital asset created by FTX, sparking a $6 billion run on the crypto exchange in which customers frantically sought to pull their deposits.

Bankman-Fried quickly found himself in hot water after it was discovered that FTX was using customer deposits to make risky bets using sister investment firm Alameda Research.

“It was pretty clear pretty soon that there was a misappropriation of user funds,” Zhao told CNBC just after Bankman-Fried was found out in late 2022. “The user funds were gone.”

“He has been probably doing this for quite a while and nobody else knew until very recently,” Zhao said.

The Bankman-Fried, 32, has held in Brooklyn’s Metropolitan Detention Center until he’s assigned to a federal prison, likely near his parents home in California.