Changpeng Zhao, founder of the giant cryptocurrency exchange Binance, must remain in the United States while he awaits sentencing for violating federal money laundering rules, a judge ruled Thursday.
Mr. Zhao, who goes by his initials CZ, pleaded guilty to the charge last month as part of a wide-ranging settlement into several intertwined investigations into Binance by the federal government. Zhao, a titanic figure in the cryptocurrency industry, also had to resign as CEO of the exchange. He faces up to 18 months in prison.
A judge initially ruled that Mr. Zhao could return to Dubai, where he lives with his partner and three children, while he awaited sentencing on February 23. But in court papers, federal prosecutors said Mr. Zhao posed a “serious risk.” on the run,” citing his significant wealth outside the country and his close ties to the United Arab Emirates government, which does not have an extradition agreement with the United States.
Judge Richard A. Jones of the United States District Court for the Western District of Washington sided with the government on Thursday and said Mr. Zhao was a flight risk.
“The defendant has enormous wealth and property abroad and has no ties to the United States,” Judge Jones wrote. “The defendant has not demonstrated by clear and convincing evidence that he is not likely to flee if he returns to the United Arab Emirates.”
A lawyer for Mr. Zhao did not immediately respond to a request for comment.
Binance and Zhao had been targets of US law enforcement for years. Binance, the world’s largest cryptocurrency exchange, has long operated in a regulatory gray area, even as it processed up to two-thirds of all digital asset transactions.
At the peak of his power, Mr. Zhao was the most influential figure in the crypto industry. On social media platform X, formerly known as Twitter, he amassed more than eight million followers, who celebrated his often defiant stance toward government regulators. He has also long been considered the richest crypto billionaire, with a estimated net price of 15 billion dollars, according to Forbes.
But last month, Zhao was forced to relinquish his status as the most powerful man in cryptocurrencies.
Binance pleaded guilty to money laundering violations and agreed to pay $4.3 billion to the US government. The exchange admitted to allowing a variety of bad actors to transact on the platform, including terrorist groups such as Hamas and Al Qaeda.
As part of a plea deal, Binance agreed to install a federal monitor to oversee the business for three years. Zhao relinquished control of the company and was replaced by a new CEO, Richard Teng.
The sanctions facing Binance are written in stone. But Mr. Zhao’s fate remains undecided. While he faces up to 18 months in prison under federal sentencing guidelines, Justice Department officials have said they could seek a harsher sentence.
Mr. Zhao, a famously elusive figure, recently divided his time between Paris and Dubai, where his family lives. He traveled to Seattle to plead guilty in federal court in November. The magistrate set his bail at $175 million, secured by $15 million in cash.
“There is no doubt that the bail package for the defendant is significant,” Judge Jones wrote in Thursday’s ruling. “But it is insufficient to guarantee his return considering the vast resources and assets at his disposal.”
