KEY POINTS
- Zhao pleaded guilty to violating the Bank Secrecy Act in a federal court in Seattle last Tuesday
- He was released from custody after he posted a $175 million personal recognizance bond
- Zhao's sentencing is scheduled for Feb. 23, 2024
Binance founder and former CEO Changpeng Zhao must remain in the U.S., at least temporarily, following his guilty plea last week. A federal judge, while considering a motion filed by the Department of Justice, ruled Monday that he cannot leave the country until his sentencing.
Zhao, popularly known as CZ, was released from custody on a personal recognizance bond after he pleaded guilty to violating the Bank Secrecy Act in a federal court in Seattle last Tuesday.
The court initially allowed the crypto mogul to leave the U.S. but required him to return 14 days before his sentencing. However, the prosecutors immediately filed a motion to restrict Zhao from returning to his home in the UAE. They argued he could be a flight risk, citing his wealth, connections and the absence of an extradition treaty between the U.S. and the Arab nation.
"In the vast majority of cases, a multi-billionaire defendant who has pleaded guilty, faces possible prison time, and lives in a country that does not extradite its citizens to the United States would be detained," the justice department lawyers said in a filing.
They also claimed they had already made an "exceptional recommendation" in suggesting that the Binance founder be allowed to remain free until his sentencing while arguing that Zhao presents a flight risk, but one that "could be managed by requiring him to remain in the U.S. and preventing him from returning to the safe haven of the UAE."
District Judge Richard Jones on Monday stayed a ruling permitting Zhao to travel to the UAE.
"Having considered the briefing, and the files and pleadings herein, the court determines it will review the decision of Magistrate Judge Brian A. Tsuchida permitting the defendant to return to the United Arab Emirates pending sentencing pursuant to the conditions of his appearance bond," the judge's ruling read. "It is ordered that the condition permitting Defendant to return to the UAE pending sentencing is stayed."
The ruling also highlighted that Zhao cannot return to the UAE until the court "resolves the Government's motion for review."
But this is not the only trouble Zhao could be facing in the days leading to his prison sentencing. A court filing by DOJ lawyers on Saturday revealed they might argue the Binance founder should be sentenced to up to 10 years in prison.
Former SEC Office of Internet Enforcement chief John Reed Stark said the latest decision of the court might not be good for Zhao.
"IMHO, Judge Jones's Stay does not bode well for CZ," he said, citing the motion filed by the DOJ. "Apparently, the U.S. Federal District Court's Pretrial Services Division, which serves as the Court's in-house independent and experienced expert determining release eligibility and setting release conditions, probation, etc., believes that CZ should be detained. That is a big deal."
"Also, Magistrate Judge Tsuchida described his initial decision to allow CZ to travel home to the UAE until 2 weeks before sentencing, as a 'close call.' To me, this signals that even Judge Tsuchida believes that Judge Jones could justifiably reverse the current bail order," Stark, a senior lecturing fellow at Duke University School of Law, added. "My take is that Judge Jones should abide by the recommendation of pre-trial services and prohibit CZ from traveling to the UAE until the sentencing hearing."
Stark believes "the issue is fairly straightforward. CZ's crimes are not regulatory parking tickets but are tantamount to mass murder and mayhem, and his wealth and special 'granted' citizenship in a non-extraditing country like the UAE render CZ a legitimate flight risk."
"Judge Jones may render a decision based solely on the pleadings, may seek additional information from the parties or he may set a date for a hearing on the dueling motions -- so stay tuned for more possible Binance-related fireworks," he wrote on X.
Breaking News: Judge Orders That The Condition Permitting CZ To Return To The UAE Pending Sentencing Is STAYED (i.e. CZ Must Remain in the Continental U.S. For Now)
— John Reed Stark (@JohnReedStark) November 27, 2023
(See Updated Compendium Below With Links To All Relevant DOJ/Binance/CZ Court Filings)
Yesterday, I predicted… pic.twitter.com/I6MmHkINv2
Zhao was released from custody after posting a $175 million personal recognizance bond.
This followed his settlement agreement with the Department of Justice, which entailed not only a fine of $50 million but also Zhao's resignation from his position as Binance's CEO.
His sentencing is scheduled for Feb. 23, 2024.
(Correction: An earlier version of this article misspelled the name of Changpeng Zhao. The error is regretted.)
