Binance’s CZ Chao to Face 10-Year Imprisonment?

Changpeng Zhao (CZ), the former CEO of Binance, is currently engaged in a contentious dispute with the US Department of Justice (DOJ) subsequent to his admission of guilt regarding violations of US anti-money laundering laws.

The DOJ, as reported by Coindesk, opposes CZ's departure from the United States despite not pushing for immediate imprisonment, citing concerns of him being a “flight risk.” This position remains firm despite CZ's voluntary appearance in court, which he presented as evidence of his commitment to staying.

CZ's legal representation has emphasized his voluntary self-surrender, expressed his intent to resolve the case, and proposed a substantial bail package. However, US Attorneys argue that the severity of potential sentencing could prompt CZ to flee to the UAE, his primary citizenship, where extradition to the US is uncertain.

Facing a looming prison term of 18 months to a maximum of 10 years following his guilty plea for money laundering violations, CZ stepped down from his role as Binance's CEO.

Simultaneously, Binance admitted guilt to multiple criminal and civil charges, agreeing to pay a significant penalty of $4.3 billion. CZ, upon pleading guilty to violating the Bank Secrecy Act, signed a substantial bond agreement of $175 million, prompting concerns that he might choose to stay in the UAE rather than face US imprisonment.

Subsequent to Zhao's admission of guilt, Binance made an agreement with the DOJ to withdraw from the US market and appoint a new CEO. Amidst this legal turmoil, Binance experienced a substantial decrease in its Bitcoin reserves.

According to data from CryptoQuant, the crypto exchange witnessed a decline of 5,000 BTC in reserves, contrasting with Coinbase, which reported an increase of around 12,000 BTC in the same period.

Changpeng Zhao's resignation and admission of guilt resulted in over $1 billion in outflows from Binance within a day. This departure was accompanied by a 25% decrease in market liquidity, indicating the impact of market makers reducing their positions in response to the legal uncertainties. Additionally, Binance's native token, BNB, saw an 8% decline on the day of settlement.