A judge denied the December 22, 2023, request of Changpeng Zhao, the Embattled Binance founder and former CEO (CZ), to travel to the United Arab Emirates (UAE) despite his multi-billion-dollar collateral pledge to guarantee his return. Unsealed January 23 court filing revealed startling details.
In the filing requesting the trip to UAE, Changpeng Zhao asked to be allowed to travel to the Emirates to be around for the surgery of a loved one, pledging all of his $4.5 billion equity in Binance US as collateral to assure his timely return, a commitment the presiding judge found not sufficient to make CZ return to the United States.
Recall that Mr. Changpeng Zhao made a similar request to travel to the United Arab Emirates last year. Justice Richard A. Jones pointed out the enormous wealth of the billionaire crypto magnate outside the US and his lack of ties to the country as reasons for his rejection.
The Many Legal Troubles of CZ
The troubles of Changpeng Zhao, the former Binance CEO, began late last year when he and his company (Binance) admitted engaging in financial crimes, including money laundering, unlicensed money transmission, and sanctions violations.
The parties (Binance and CZ) agreed to pay fines of over $4 billion to the United States government with several conditions. For one, Changpeng Zhao will agree to plead guilty to anti-money laundering violations and proceed to face trial and would also immediately resign as the CEO of Binance.
His admission of guilt meant CZ would have to be tried and sentenced separately after the humongous fine paid by Binance, which explains the legal troubles the crypto billionaire is facing today. Due to his enormous wealth and the gravity of his person, the courts identified Changpeng Zhao as a security risk, only allowing him to travel within the United States freely (under a $175 million release bond).
The former sentencing should occur anytime from now, and he will (expectedly) get between 10 and 18 months in prison. Legal representatives have agreed in an earlier plea deal not to appeal any sentence not exceeding an 18-month imprisonment.
Why is CZ Stuck in the US?
Recall that the embattled former Binance CEO made the same request in early December 2023, with the United States government opposing his motion. Justice Richard A. Jones sided with the US government, disallowing the Binance CEO from leaving the continental United States before sentencing.
Back then, the former Binance CEO did not pledge his entire US assets as collateral, instead trying to get a nod from the court based on his existing $175 million release bond, a request the judge swiftly rejected for the lack of an extradition treaty between the United States and the UAE, among other reasons.
“The Court is mindful of the government’s assertion that it is unaware of any instance in which the UAE has extradited a citizen of the UAE to the United States,” the ruling partially read, noting that CZ has favored status in the UAE.
While it admitted the former CEO once returned from the Emirates to plead guilty in the US, the court noted that returning for a guilty plea and returning to face an 18-month sentence are two different risks, eroding the confidence in Changpeng Zhao’s return promise.
In addition to the lack of an extradition treaty with the Emirates, the court also determined that the former CEO is wealthy enough to absorb the loss of his pledge if he chooses not to return to the United States to face sentencing.
While certified true copies of the new judgment against the Binance founder have not been made public, Justice Richard A. Jones shared many of the same concerns. Changpeng Zhao’s enormous wealth outside the United States, his favored status in the United Arab Emirates, and the absence of an extradition treaty between the US and the UAE are reasons why the US Judge will not allow him to travel, leaving him stuck (pretty much) in the United States.
