DOJ requests Changpeng Zhao be barred from leaving the US pending sentencing

What’s new? The US Department of Justice (DOJ) said that the court should order Changpeng Zhao to stay in the country until sentencing, which is scheduled until February 23, 2024. Earlier, Binance’s founder voluntarily came to the States to settle claims against the crypto exchange. As part of the settlement, he pleaded guilty to failing to maintain an effective anti-money laundering program, resigned as CEO, and paid a $50 million fine and $175 million bail. At the same time, the court allowed Zhao to return to the UAE, where he lives with his wife and three children, on the condition that he would arrive back in the United States two weeks before the meeting.

Material by Reuters

What else is known? In response, the DOJ urged not to allow Zhao’s departure to the UAE because of “an unacceptable risk of flight.” Officials emphasize that they will not be able to ensure the businessman’s return to the US because he has a privileged status in the UAE and, in addition, there is no extradition treaty between the countries.

“Faced with the prospect of traveling back to the United States to face up to 18 months in prison, he may elect to instead simply stay in the UAE with his family,” the prosecutor’s office said.

Officials also noted that most of Zhao’s fortune is held outside US jurisdiction, which also increases the risk of failure to appear. The businessman should remain in the continental United States for the next three months, they said.

As part of the agreement with US authorities, Binance also agreed to pay fines to the DOJ’s anti-money laundering (FinCEN) and sanctions enforcement (OFAC) divisions and the commodities’ regulator (CFTC) totaling $4,3 billion.

The global platform will completely cease operations in the country and allow US officials on its supervisory board for five years to monitor compliance. Zhao was replaced as CEO by regional senior executive Richard Tan.

Changpeng Zhao steps down as Binance CEO as part of a settlement with the US DOJ

The exchange will pay a total of $4,3 billion in fines to various federal agencies

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Consequences for Binance. Against the background of this news, the rate exchange of the token, BNB, collapsed by 14% over the day and reached $228, while users withdrew more than $1 billion from the platform. On November 23, 09:00 UTC, the rate of BNB partially recovered to $235, and the daily outflow from Binance was less than $0,5 billion.

Along with this, CryptoQuant analysts noted that Binance’s bitcoin reserves decreased by 5000 coins, while the indicator of the American crypto exchange Coinbase increased by 12 000 BTC.

Coinbase CEO Brian Armstrong said that his exchange, unlike its competitors, was initially focused on compliance, which required significant resources, but brought positive results in the long term.

“We now have an opportunity to start a new chapter for this industry,” the businessman said, adding that the events surrounding Binance should be a catalyst for clear rules for crypto regulation in the country.

JPMorgan was also positive about the implications of the agreement between Binance and the US Department of Justice, as it will eliminate the systemic risk associated with a hypothetical collapse of the exchange.