Zhao Changpeng, founder and chief executive officer of Binance, attended the Viva Technology conference dedicated to innovation and startups at the Porte de Versailles exhibition center in Paris, France on June 16, 2022.
Benoît Tessier | Reuters
Billionaire Binance Founder Changpeng Zhao cannot leave the United States before his criminal sentence because of his “enormous wealth” and lack of ties to the US, a federal judge ruled.
The ruling overturns a previous ruling that allowed Zhao, the cryptocurrency titan also known as CZ, to travel to his home in the United Arab Emirates before his sentencing on Feb. 23.
Sided with federal prosecutors, US District Judge Richard Jones acknowledged, “This is an unusual case.”
“The defendant has substantial wealth and assets overseas, and has no ties to the United States. His family resides in the UAE and he appears to have favored status in the UAE,” Jones wrote in a six-page order on Thursday in federal court in Seattle, Washington.
“Under these circumstances the Court finds that the defendant has not established clear and convincing evidence that he is unlikely to flee if he returns to the UAE,” Jones wrote.
An attorney for Zhao did not immediately respond to CNBC’s request for comment.
Zhao, the face and former CEO of the world’s largest cryptocurrency exchange, pleaded guilty last month to a charge of violating federal money laundering rules. Binance itself also pleaded guilty to related charges and agreed to pay more than $4.3 billion in financial penalties.
Zhao was released on a $175 million bond, and a federal magistrate judge initially ruled that he could go to his home abroad pending his sentencing. But prosecutors have asked to overturn that decision, arguing that “no combination of conditions” would warrant Zhao’s return to the US
They noted that the US does not have an extradition treaty with the UAE and the government could find no example of that country extraditing one of its citizens to the US.
“This case is unlikely to be the first,” they wrote before noting that Zhao is a multibillionaire and most of his wealth is believed to be held overseas.
Because UAE citizenship must be offered by the government, the Chinese-born founder’s status as a citizen “is itself an indication of his favored position,” US prosecutors wrote.
They also argued that most of Zhao’s $175 million bond was pegged to assets outside US jurisdiction, should Zhao decide to stay in the UAE.
Zhao provided $15 million in security to his attorney, and his bond was secured by three unnamed guarantors who guaranteed just over $5 million in assets, court documents note. But the remainder of his bond is “more than the government can afford,” prosecutors said.
Jones last week temporarily barred Zhao from returning home while he considers a government request to keep him in the US
Zhao’s lawyers have argued that he is not a flight risk, in part because he has no criminal history and because he and Binance have taken full responsibility for their actions.
They also noted that Zhao will pay a $150 million fine to the US Commodity Futures Trading Commission as part of his settlement with the government.
In most cases, those arguments will be sufficient, Jones wrote in Thursday’s ruling.
But “a critical feature of the government’s motion is the extent of the defendant’s enormous wealth and the absence of an extradition treaty with the UAE,” he wrote.
“In addition, the defendant’s family resides in the UAE and there is no indication that he has any other ties to the United States,” the judge said. He added that Zhao “does not face a lenient sentence” because the government could request that he be jailed for up to 18 months.
