HomeNewsFederal Judge Rejects CZ's $4.5 Billion Binance Equity Pledge

Federal Judge Rejects CZ’s $4.5 Billion Binance Equity Pledge

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  • Changpeng Zhao, founder of Binance, was denied permission by a federal judge to travel to the UAE for personal reasons, despite offering $4.5 billion in Binance equity as security.
  • Zhao, awaiting sentencing for a plea agreement, is considered a flight risk due to his significant wealth and lack of ties to the U.S.

Zhao’s Travel Request and Judicial Concerns

In a recent court proceeding, Changpeng “CZ” Zhao, the founder of the cryptocurrency exchange Binance, faced a setback when a federal judge denied his request to travel to the United Arab Emirates. This decision came even though Zhao had proposed his Binance equity, valued at $4.5 billion, as a security guarantee for his return to the United States. The valuation of Zhao’s shares was based on Binance’s last fundraising round two years ago, as detailed in a letter from Zhao’s lawyers to Judge Richard Jones.

The situation stems from Zhao’s plea in a Seattle federal court last November, where he admitted to failing to maintain an effective anti-money laundering program at Binance, the world’s largest cryptocurrency exchange. Following his plea, Zhao agreed to a settlement involving $4.3 billion in penalties and stepped down as CEO of the company. Despite these legal entanglements, he has remained free in the U.S. on a $175 million release bond.

Zhao’s request to Judge Jones was to allow him to travel to Abu Dhabi from January 4 for one to four weeks to attend to the hospitalization, surgery, and recovery of an unnamed individual closely associated with him. The specifics of the medical procedure were redacted in the letter, which also noted the absence of consent from federal prosecutors for Zhao’s travel.

Judicial Ruling and Flight Risk Concerns

During a closed hearing on December 29, Judge Jones decided against Zhao’s request to travel, as shown in court records. This refusal was not the first instance of Zhao’s travel requests being denied. Earlier in December, Judge Jones had rejected another plea by Zhao to visit the UAE, citing his

“enormous wealth”

as a substantial flight risk factor. The judge emphasized Zhao’s considerable assets abroad and the lack of strong ties to the United States, particularly noting his family residing in the UAE and his apparent favored status there.

This decision underlines the judiciary’s cautious stance towards individuals of significant wealth and international connections, especially in cases involving substantial legal and financial implications. The court’s ruling reflects a rigorous approach to ensuring compliance with legal obligations, particularly in cases where the possibility of flight could undermine the judicial process. As Zhao awaits his sentencing on February 23, this development highlights the complexities and challenges faced by high-profile individuals in legal proceedings, especially in the rapidly evolving domain of cryptocurrency and blockchain technology.

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Bhushan Akolkar
Bhushan Akolkar
Bhushan is a FinTech enthusiast and possesses a strong aptitude for understanding financial markets. His interest in economics and finance has drawn his attention to the emerging Blockchain Technology and Cryptocurrency markets. He holds a Bachelor of Technology in Electrical, Electronics, and Communications Engineering. He is continually engaged in a learning process, keeping himself motivated by sharing his acquired knowledge. In his free time, he enjoys reading thriller fiction novels and occasionally explores his culinary skills. Business Email: info@ethnews.com Phone: +49 160 92211628