A judge ruled Thursday (Dec. 7) that Zhao was a flight risk, The New York Times reported Friday (Dec. 8).
Another judge had ruled earlier that the cryptocurrency exchange founder could return to Dubai while awaiting his sentencing, according to the report.
Zhao’s attorneys have argued that Zhao is not a flight risk, citing as evidence the facts that he came to the U.S. to enter his guilty plea, intends to resolve the case and proposed a sizeable bail package.
However, federal prosecutors argued that Zhao was a flight risk because of his substantial wealth outside the country and his close ties with the United Arab Emirates (UAE), which does not have an extradition treaty with the U.S., the Friday New York Times report said.
Having violated federal money-laundering rules, Zhao faces up to 18 months in prison under federal sentencing guidelines but may be subject to a stiffer penalty that could be sought by the Justice Department, per the report.
Zhao agreed in November to resign from his post as CEO of Binance and plead guilty to violating criminal anti-money laundering requirements, as part of an agreement with federal prosecutors.
“I made mistakes, and I must take responsibility,” Zhao said when announcing the move on X, formerly known as Twitter. “This is best for our community, for Binance, and for myself.”
A Justice Department report found that Binance’s failure to implement an effective anti-money laundering program resulted in illicit actors using the cryptocurrency exchange in various ways.
The exchange “willfully failed to report” more than 100,000 suspicious transactions from a host of sanctioned groups and countries, including Hamas, al Qaeda and North Korea, the DOJ said.
Additionally, the charges said that the compliance failures were intentional, since enabling transactions to users of all sorts provided Binance with a significant source of revenue and contributed to its growth. Had the exchange made it harder for bad actors to use the platform, well-meaning users might also choose not to transact on the platform due to increased frictions.
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