In This Article
Changpeng Zhao, the former CEO of Binance, is facing potential incarceration for money laundering charges, but his legal team is advocating for probation. Meanwhile, Terraform Labs co-founder Do Kwon is still battling with extradition issues in Montenegro after his legal team appealed an Apr. 8 decision from the High Court in Podgorica, which would have allowed Justice Minister Andrej Milović to decide on the Terraform co-founder’s extradition. .
The U.S. has also arrested executives from Samourai Wallet on charges of money laundering and operating an unlicensed business. William Morro has been charged with bank fraud connected to the OneCoin cryptocurrency scheme, while Binance executive Tigran Gambaryan will remain detained in Nigeria facing tax evasion and money laundering charges.
Changpeng Zhao's Future Uncertain
After recently pleading guilty to violating money laundering laws, Former Binance CEO Changpeng “CZ” Zhao is facing a possible sentence that could include prison time. Zhao's legal team is strongly advocating for probation, as they believe there are multiple risks associated with his potential incarceration at the Federal Detention Center (FDC) SeaTac, Washington. Robert Palmquist, a former warden of the facility, also shared his concerns in a court filing about the lack of natural light, staffing shortages, and the mixed security levels at FDC SeaTac, which could expose Zhao to theft, extortion, and other threats due to his wealth and public status.
The facility is located near Seattle-Tacoma International Airport, and is known for housing many high-profile inmates. In fact, the facility currently holds 794 prisoners. Some of the more notable people who have experienced FDC SeaTac’s hospitality were a Proud Boys member involved in the Jan. 6, 2021 Capitol attack, and Jim Bell, a crypto-anarchist who was released in 2012 after a tax evasion conviction related to his promotion of ‘Assassination Politics.’
In support of a lenient sentence, Zhao’s attorneys have also submitted several declarations, including testimonials from friends, family, and business leaders. Although the U.S. sentencing guidelines could allow for up to ten years of imprisonment for Zhao's charges, the recommended sentence is between 12 to 18 months. However, prosecutors are seeking a harsher penalty of three years in prison and a $50 million fine.
Zhao has remained mostly silent about the charges since his guilty plea, which was part of a $4.3 billion settlement with U.S. authorities in November of 2023. He has, however, expressed remorse over his decisions at Binance and his readiness to accept the consequences. Zhao is scheduled for sentencing on Apr. 30 and has been free on a $175 million bond.
Battle Intensifies Over Do Kwon's Fate
Meanwhile, Terraform Labs co-founder Do Kwon’s legal saga continues as his attorneys appeal a recent high court ruling in Montenegro about his potential extradition. On Apr. 8, the High Court in Podgorica decided to let Justice Minister Andrej Milović determine whether Kwon should be extradited to the United States or South Korea. This decision was challenged by Kwon's legal team, which labeled the ruling as "unfounded and illegal" and criticized its interpretation of the law.
The case has been very complex, with multiple appeals and motions filed by Kwon’s lawyers, contributing to an ongoing legal back-and-forth across various levels of Montenegro's judiciary. Kwon was initially detained in March of 2023 for using fake travel documents while attempting to leave Montenegro. Despite these complications, he has been allowed to travel within the country as the courts continue to assess the extradition requests.
In the United States, Kwon and Terraform were found liable for fraud in a civil case started by the U.S. Securities and Exchange Commission (SEC), which plans to seek a $5.3 billion judgment. Kwon personally faces $100 million in civil penalties.
The fallout from Terraform’s collapse in 2022 triggered a massive downturn in the crypto market, leading several well known companies to declare bankruptcy. Terraform itself sought Chapter 11 protection in the U.S. earlier this year. For now, Kwon's future is still uncertain as he waits for decisions from Montenegrin courts and the justice minister.
U.S. Authorities Arrest William Morro in OneCoin Fraud Case
CZ and Do Kwon are not the only crypto players in trouble with the law. William Morro, who is associated with the notorious OneCoin cryptocurrency scheme, has been arrested and charged with bank fraud, according to recent filings in the U.S. District Court for the Southern District of New York. The charges relate to Morro’s activities back in 2016, where he allegedly facilitated the transfer of $35 million from bank accounts in China to Hong Kong before moving more than $6 million into a U.S. account he controlled. This was very likely part of a broader plan to defraud involving huge sums of money linked to the OneCoin operation.
Morro surrendered to authorities and has pleaded guilty to one count of conspiracy to commit bank fraud and was released pending a sentencing hearing set for Aug. 1. This development happened as there were already ongoing legal actions against several people connected to OneCoin, which ended up tricking investors out of approximately $4 billion. Some of the people already charged by the Justice Department include lawyer Mark Scott, Irina Dilkinska, and Gilbert Armenta, the boyfriend to OneCoin’s founder Ruja Ignatova.
Morro has retained high-profile attorneys Mark Cohen and Jonathan Abernethy for his defense, which suggests he is taking the charges against him pretty seriously as he could be facing up to 30 years in prison if he is convicted. Mark Cohen also represented Sam Banman-Fried during his 2023 criminal trial.
Samourai Wallet Executives Arrested
The co-founders of crypto mixer Samourai Wallet are facing their own legal challenges as they have been arrested on charges by the U.S. Justice Department. CEO Keonne Rodriguez was arrested in Pennsylvania, and CTO William Hill was arrested in Portugal, with the U.S. seeking Hill's extradition. They face charges of money laundering and operating an unlicensed money transmitting business, which could leave them with maximum sentences of 20 years and five years in prison, respectively.
Samourai Wallet, known for its Whirlpool and Ricochet services, allegedly processed more than $2 billion in illegal transactions and facilitated $100 million in money laundering. The services also added unnecessary transactions to obscure the trail of crypto funds. The company reportedly earned $4.5 million from these services.
As part of the operation, the U.S. also seized the company’s servers in Iceland and stopped downloads of its app from the Google Play Store. The investigation is being taken seriously as it involved multiple U.S. agencies including the Internal Revenue Service and the Federal Bureau of Investigation.
Legal Troubles Mount for Binance Executives in Nigeria
It is not just the US cracking down on the crypto industry. Tigran Gambaryan, a Binance executive, has been detained in Nigeria since February and will remain in Kuje prison until at least May 17, pending a bail hearing. Gambaryan, alongside fellow executive Nadeem Anjarwalla, was arrested while attempting to address allegations of currency manipulation involving Nigeria’s naira. This led Binance to completely stop all transactions involving the naira.
The situation got even worse when Anjarwalla escaped custody in March using his Kenyan passport and fled from Abuja. He was later caught by Kenyan police and now faces possible extradition back to Nigeria. Meanwhile, Gambaryan has entered a not guilty plea to charges of tax evasion and money laundering, with his trial scheduled to begin on May 2.
The legitimacy of the charges against Gambaryan has been questioned by many people in the industry considering the fact that he held no decision-making authority in the company. His wife, Yuki Gambaryan, started a petition urging both Nigerian and U.S. officials, including President Joe Biden, to facilitate his return to the United States. The petition has received a lot of support so far.
