Binance founder must stay in the US before being sentenced

Changpeng Zhao, the founder of giant cryptocurrency exchange Binance, must remain in the United States as he awaits sentencing for violating federal money laundering rules, a judge ruled Thursday.

Mr. Zhao, who goes by his initials CZ, pleaded guilty to the charges last month as part of a sweeping settlement of several interlocking investigations into Binance by the federal government. Mr Zhao, a titanic figure in the crypto industry, was also forced to step down as CEO of the exchange. He faces as much as 18 months in prison.

A magistrate judge initially ruled that Mr Zhao could return to Dubai, where he lives with his partner and three children, while he awaited sentencing on February 23. But in the lawsuits, federal prosecutors said Mr. Zhao posed a “serious risk.” of flights,” citing his considerable wealth outside the country and his close ties to the United Arab Emirates government, which has no extradition agreement with the United States.

Judge Richard A. Jones of the U.S. District Court for the Western District of Washington sided with the government on Thursday, saying Mr. Zhao posed a flight risk.

“The defendant has enormous wealth and assets abroad, and no ties to the United States,” Judge Jones wrote. “The suspect has not demonstrated by clear and convincing evidence that he is not likely to flee if he returns to the UAE.”

A lawyer for Mr. Zhao did not immediately respond to a request for comment.

Binance and Mr. Zhao had been targeted by U.S. law enforcement officials for years. Binance, the world’s largest cryptocurrency exchange, has long operated in a regulatory gray area even as it processed as many as two-thirds of all digital asset transactions.

At the height of his power, Mr. Zhao was the most influential figure in the crypto industry. On the social media platform He has also long been considered the richest crypto billionaire, with a estimated net worth of $15 billion, according to Forbes.

But last month, Mr. Zhao was forced to relinquish his status as crypto’s most powerful man.

Binance pleaded guilty to money laundering and agreed to pay $4.3 billion to the US government. The exchange admitted that a range of bad actors were able to transact on the platform, including terrorist groups such as Hamas and Al Qaeda.

As part of a plea deal, Binance agreed to install a federal monitor to oversee the company for three years. Mr. Zhao gave up control of the company and a new CEO, Richard Teng, replaced him.

The penalties Binance faces are set in stone. But Mr. Zhao’s fate remains undecided. Although he faces up to 18 months in prison under federal sentencing guidelines, Justice Department officials have said they may seek a stiffer sentence.

A famously elusive figure, Mr. Zhao has recently divided his time between Paris and Dubai, where his family lives. He traveled to Seattle in November to plead guilty in federal court. The magistrate set his bail at $175 million, including $15 million in cash.

“There is no question that the bail package for the defendant is significant,” Judge Jones wrote in Thursday’s ruling. “But it is insufficient to guarantee his return considering the vast resources and assets at his disposal.”