Binance’s former CEO CZ faces potential prison, Changpeng Zhao (CZ), is currently under extreme scrutiny. U.S. government prosecutors are trying to prevent CZ from moving out of the country before sentencing. Being a dual citizen of the United Arab Emirates and Canada, CZ has recently pleaded guilty to charges related to violating anti-money laundering and US sanctions.
In a filing on Tuesday, the US Department of Justice (DOJ) has filed a motion opposing allowing CZ to return to his residence ahead of the slated sentencing on February 23, 2024. John Reed Stark, former chief of the SEC Office of Internet Enforcement, commented on the situation.
In an X post (formerly known as Twitter), Stark drew attention to the gravity of the situation, emphasizing the DOJ’s fears that CZ’s immense wealth, coupled with his connections in the UAE, could lead to a scenario where he avoids returning to face a potential 18-month prison term.
The problem stems from CZ’s $175 million bond given terms. First, U.S. Magistrate Judge Brian A. Tsuchida granted CZ his return to stay in his UAE home before sentencing. However, the DOJ is pushing for a review of this decision by U.S. District Judge Richard A. Jones, arguing that CZ poses a significant flight risk.
According to Stark:
“Despite his voluntary appearance to enter his plea, there is a significant possibility that CZ will choose not to return for sentencing as the prospect of a potential prison sentence draws nearer.”
However, as the case progresses, a lot of factors are going to play – as the nature of the charges, the strength of the evidence against CZ, and his personal history and characteristics. On the other side, legal experts now expect strong reciprocation from CZ’s legal team.
The outcome of the motion is still being determined, with Judge Jones having the discretion to uphold or overturn the Magistrate Judge’s decision, as District Court Judges typically hesitate to overturn such decisions.
Whether Judge Jones will decide to affirm or reverse the decision of the controversial Magistrate Judge is still impending the judgment of the motion, considering District Court Judges usually hesitate to reverse such decisions.
Binance Faces Historic Exit From U.S.
Meanwhile, per the settlement with the Financial Crimes Enforcement Network (FinCEN), Binance is also to exit entirely from the U.S. market. The deal requires a five-year monitor to be appointed, which would see that the sanction compliance program of Binance is supervised and, during that time, would access the company’s records and system courtesy of the U.S. Treasury Department.
The U.S. Department of the Treasury, through FinCEN, OFAC, and IRS Criminal Investigation, has taken action against Binance and its affiliates for violating U.S. anti-money laundering (AML) and sanctions laws. Being the world’s largest virtual currency exchange, handling about 60% of centralized virtual currency spot trading, Binance was set to face settlements for Bank Secrecy Act (BSA) violations and breaches of multiple sanctions programs.
The violations include a lack of implementation of programs that prevent or at least report suspicious transactions involving terrorists such as Al-Qassam Brigades of Hamas, Palestinian Islamic Jihad (PIJ), Al Qaeda, and ISIS. Binance also had the failure to prevent matching trades between U.S. users and those in sanctioned jurisdictions such as Iran, North Korea, Syria, and Crimea.
The U.S. Treasury Secretary, Janet L. Yellen, emphasized Binance’s neglect of legal obligations in pursuit of profit, allowing funds to flow to terrorists, cybercriminals, and child abusers. FinCEN’s settlement imposes a $3.4 billion civil money penalty and a five-year monitorship.
It requires measures for Binance’s complete exit from the U.S. OFAC’s settlement, which involves a $968 million penalty and strict sanctions compliance obligations. The monitoring of the remedial measures and follow-up reviews should be able to ensure that Binance remains compliant.
Impact On Binance Coin (BNB)
Binance coin BNB was hit hard by these consequences; within an hour of the news, BNB had dropped 15% to $225. It causes more than $3 million BNB Long position liquidations, according to data tracker Coinglass. After that, BNB experienced some recovery, and as of now, it is trading at $231.94 with a slight rise in the daily chart, while the 7-day chart is bleeding with an almost 7% drop in value.
Despite these controversies, Coincodex predicted a considerable rise in BNB price in the following week, “Binance Coin is predicted to rise by 15.84% and reach $ 269.75 by November 27, 2023.” While technical indicators paint a different scenario, the general sentiment around the coin is bearish, with 6 technical analysis indicators signaling bullish and 24 signaling bearish signals.
