Binance founder Changpeng Zhao is facing a critical moment today as his sentencing hearing unfolds, determining the extent of his punishment for violating US money laundering laws. Prosecutors are pushing for a three-year prison term, twice the recommended 18 months, citing the significant impact of Zhao’s actions. In contrast, Zhao’s defense argues against any jail time, highlighting the rarity of incarceration in similar cases.

Following his guilty plea and resignation from Binance in a settlement with the US Department of Justice last November, Zhao also agreed to a substantial $4.3 billion fine. As part of the agreement, he waived his right to appeal a sentence below 18 months and agreed to a $50 million fine, a fraction of his vast $33 billion fortune.

The US government alleges that Binance knowingly evaded anti-money laundering regulations, enabling customers from Iran, Cuba, and Syria to conduct transactions in violation of US sanctions. Concurrently with Zhao’s plea, settlements were reached with the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC).

As the sentencing proceedings unfold in Seattle, the debate over Zhao’s incarceration intensifies. Due to his non-citizen status, Zhao is ineligible for a minimum-security facility, raising concerns about his safety in certain facilities given his wealth and Binance’s cooperation with authorities.

The discussion also delves into the concept of ‘general deterrence,’ with the government emphasizing the need to punish Zhao to dissuade others from similar actions. Judge Richard Jones underscores the unprecedented scale and impact of Zhao’s noncompliance, engaging in a dialogue with the defense regarding the appropriateness of imprisonment in this case.