Binance Founder Ordered to Remain in U.S. Before Sentencing

Changpeng Zhao, the founder of the giant cryptocurrency exchange Binance, must remain in the United States as he waits to be sentenced for violating federal money-laundering rules, a judge ruled on Thursday.

Mr. Zhao, who goes by his initials, CZ, pleaded guilty to the charge last month as part of a wide-ranging settlement of several interlocking investigations into Binance by the federal government. A titanic figure in the crypto industry, Mr. Zhao also had to step down as the exchange’s chief executive. He faces as much as 18 months in prison.

A magistrate judge initially ruled that Mr. Zhao could return to Dubai, where he lives with his partner and three children, while he awaited sentencing on Feb. 23. But in court filings, federal prosecutors said that Mr. Zhao was a “serious risk of flight,” citing his substantial wealth outside the country and his close ties with the government of the United Arab Emirates, which does not have an extradition agreement with the United States.

Judge Richard A. Jones of the U.S. District Court for the Western District of Washington sided with the government on Thursday, saying that Mr. Zhao was a flight risk.

“The defendant has enormous wealth and property abroad, and no ties to the United States,” Judge Jones wrote. “The defendant has not established by clear and convincing evidence that he is not likely to flee if he returns to the U.A.E.”

A lawyer for Mr. Zhao did not immediately respond to a request for comment.

Binance and Mr. Zhao had been targets of U.S. law enforcement officials for years. The largest crypto exchange in the world, Binance has long operated in a regulatory gray area, even as it processed as many as two-thirds of all digital asset trades.

At the peak of his power, Mr. Zhao was the most influential figure in the crypto industry. On the social media platform X, formerly known as Twitter, he accumulated more than eight million followers, who celebrated his often-defiant stance toward government regulators. He has also long been regarded as the richest crypto billionaire, with an estimated net worth of $15 billion, according to Forbes.

But last month, Mr. Zhao was forced to relinquish his status as crypto’s most powerful man.

Binance pleaded guilty to money-laundering violations and agreed to pay $4.3 billion to the U.S. government. The exchange admitted to allowing a range of bad actors to conduct transactions on the platform, including terrorist groups like Hamas and Al Qaeda.

As part of a plea deal, Binance agreed to install a federal monitor to oversee the business for three years. Mr. Zhao gave up control of the firm, and a new chief executive, Richard Teng, replaced him.

The penalties facing Binance are set 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 may request a stiffer penalty.

Mr. Zhao, a famously elusive figure, has recently split 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 dispute that the bail package for the defendant is significant,” Judge Jones wrote in the ruling on Thursday. “But it is inadequate to ensure his return when considering the vast resources and assets at his disposal.”