Binance founder CZ denied travel to UAE despite offering $4.5 billion in equity
Changpeng “CZ” Zhao, the founder of Binance, has been denied permission to travel to his home in the United Arab Emirates (UAE) by a federal judge, even though he offered to post his $4.5 billion in Binance equity as security for his return to the U.S.
Zhao, who pleaded guilty in November to failing to maintain an effective anti-money laundering program at Binance, is due to be sentenced on Feb. 23. He faces up to 10 years in prison and a $500,000 fine. Binance agreed to pay $4.3 billion in penalties in the case, which was the largest ever imposed on a cryptocurrency company by the U.S. government.
Zhao, who stepped down as CEO of Binance because of his plea, has remained free in the U.S. on a $175 million release bond. He requested to travel to Abu Dhabi on Jan. 4 for a period of one to four weeks, so he could be present for the “hospitalization and surgery” of a person in his life, whose identity and medical condition were not disclosed in court documents.
Zhao’s lawyers argued that he posed no flight risk, as he had cooperated fully with the authorities and had offered to post his Binance equity as security for his return. The equity was worth $4.5 billion, based on Binance’s last round of fundraising two years ago, according to a letter from Zhao’s lawyers to Judge Richard Jones on Dec. 22.
However, Judge Jones denied Zhao’s request, after holding a closed hearing on Dec. 29. The judge said Zhao’s “enormous wealth” made him a significant flight risk, as he had no ties to the U.S. and had favored status in the UAE, where his family resides.
“The defendant has enormous wealth and property abroad, and no ties to the United States. His family resides in the UAE and it appears that he has favored status in the UAE,” Jones wrote in a six-page order on Dec. 7. “Under these circumstances the Court finds that the defendant has not established by clear and convincing evidence that he is not likely to flee if he returns to the UAE.”
Zhao’s lawyers have not commented on the judge’s decision. Zhao has not made any public statements since his plea. Binance has not responded to requests for comment.
Binance, which was founded by Zhao in 2017, is the largest cryptocurrency exchange in the world by trading volume. It offers hundreds of digital coins and tokens for trading, as well as derivatives, futures, and other services. It operates in more than 180 countries and regions, but has no official headquarters or registration.
Binance has faced regulatory scrutiny and legal challenges in several jurisdictions, including the U.S., the U.K., Germany, Japan, Singapore, and Hong Kong. It has been accused of facilitating money laundering, tax evasion, market manipulation, and other illicit activities through its platform.
The U.S. Department of Justice and the Internal Revenue Service launched a criminal investigation into Binance in May 2021, alleging that the company had failed to comply with U.S. anti-money laundering and tax reporting laws. The investigation resulted in Zhao’s guilty plea and Binance’s record-breaking settlement in November.
The U.S. Securities and Exchange Commission (SEC) has also sued Binance, claiming that it illegally offered securities to U.S. investors without registering with the agency. The SEC has sought to freeze Binance’s assets and impose civil penalties on the company and its executives. The case is pending in a New York federal court.
Binance has denied any wrongdoing and has said that it is committed to complying with all applicable laws and regulations. It has also said that it is working to improve its compliance and governance standards, and that it has hired former regulators and law enforcement officials to advise and oversee its operations.
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