In a major setback for the crypto industry, a US federal judge has rejected the motion of Changpeng Zhao, the founder and CEO of Binance, to travel outside the US before his sentencing hearing. Zhao, who is widely known as CZ, is facing criminal charges of money laundering, tax evasion and violating sanctions laws.
CZ was arrested in September 2023, when he landed in New York to attend a crypto conference. He was accused of operating an unlicensed money transmitting business, facilitating transactions with sanctioned entities and individuals, and failing to report his income and assets to the IRS. He pleaded not guilty and was released on a $10 million bail, with the condition that he surrender his passport and remain in the US until his trial.
However, CZ filed a motion in November 2023, requesting permission to travel to Singapore, where Binance is headquartered, for business and personal reasons. He claimed that he needed to oversee the operations of his company, which is the largest crypto exchange in the world by trading volume, and that he had family and health issues that required his presence in Singapore. He also argued that he was not a flight risk, as he had cooperated with the authorities and had substantial ties to the US.
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The prosecution opposed CZ’s motion, stating that he posed a significant flight risk, given his access to vast financial resources, his influence in the crypto community, and his connections to multiple jurisdictions that do not have extradition treaties with the US. They also alleged that CZ had continued to engage in illegal activities while on bail, such as transferring funds to offshore accounts, communicating with sanctioned entities and individuals, and promoting unregulated crypto products.
On December 15, 2023, Judge James Otero denied CZ’s motion, ruling that he had not shown sufficient reasons to justify his travel request. The judge said that CZ had failed to provide any evidence of his family or health issues, and that his business interests did not outweigh the risk of flight. The judge also noted that CZ had violated some of the terms of his bail agreement, such as using encrypted messaging apps and accessing crypto wallets.
CZ’s legal team appealed the judge’s decision, claiming that it was arbitrary and unreasonable. They also filed a new motion on December 29, 2023, asking for a reconsideration of the travel request, citing new developments in CZ’s personal and professional life. They said that CZ had received an urgent medical diagnosis that required him to undergo surgery in Singapore, and that Binance was facing a potential takeover by a rival company that threatened its existence.
However, on January 1, 2024, Judge Otero denied CZ’s new motion as well, saying that it was essentially a rehash of the previous motion, with no new or compelling evidence. The judge said that CZ had not provided any medical records or documents to support his diagnosis claim, and that Binance’s takeover threat was speculative and unsubstantiated. The judge also expressed skepticism about CZ’s sincerity and credibility, saying that he had shown a pattern of deception and evasion throughout the case.
CZ’s sentencing hearing is scheduled for February 15, 2024. He faces up to 20 years in prison if convicted on all charges. His lawyers have said that they will continue to fight for his rights and freedom, and that they will appeal the judge’s rulings to a higher court. Meanwhile, Binance has issued a statement saying that it is operating normally and that it is confident in its future prospects.
SEC may notify Bitcoin ETF issuers as soon as Tuesday or Wednesday – Reuters
Meanwhile, the long-awaited Bitcoin ETFs may finally get the green light from the U.S. Securities and Exchange Commission (SEC) as early as this week, according to a Reuters report. The report cites unnamed sources familiar with the matter, who said that the SEC could notify the issuers of the first Bitcoin futures ETFs as soon as Tuesday or Wednesday that they have met all the regulatory requirements and can start trading on Monday, January 15th.
This would be a major milestone for the cryptocurrency industry, which has been lobbying for years for a Bitcoin ETF that would allow retail and institutional investors to gain exposure to the digital asset without having to buy and store it directly. A Bitcoin futures ETF would track the price of Bitcoin through contracts traded on regulated exchanges, such as the Chicago Mercantile Exchange (CME).
The SEC has been reluctant to approve a Bitcoin ETF that would hold the underlying asset, citing concerns over market manipulation, custody, and investor protection. However, the agency has signaled a more favorable stance towards a Bitcoin futures ETF, which would fall under the existing regulatory framework for commodity-based funds.
The Reuters report did not name the issuers that could receive the SEC’s approval, but several firms have filed for a Bitcoin futures ETF in recent months, including, BlackRock, ProShares, Invesco, Valkyrie, VanEck, and Galaxy Digital. The SEC has set deadlines to either approve or reject these applications in October and November but shifted to January 2024 to accommodate more clarity and provisions.
However, the SEC has set a deadline of January 14, 2024, to make a decision on VanEck’s spot Bitcoin ETF proposal, which is the first one in line for review. If approved, it would be the first spot Bitcoin ETF in the US, and likely pave the way for others to follow. If rejected, it would be another setback for the crypto industry, which has been waiting for years for a spot Bitcoin ETF in the US.
BlackRock’s filing suggests that it is confident that the SEC will eventually approve a spot Bitcoin ETF in the US, and that it wants to be ready to launch its own product when that happens. BlackRock has already shown its interest in Bitcoin and other cryptocurrencies, as it has invested in several crypto-related companies and funds and has allowed some of its funds to hold Bitcoin futures contracts.
By launching a spot Bitcoin ETF in the US, BlackRock would further cement its position as a leader in the crypto space and offer its clients a new way to gain exposure to the digital asset class.
If approved, a Bitcoin futures ETF could boost the demand and liquidity for Bitcoin, as well as its price. It could also pave the way for more crypto-related products and services in the U.S. market, such as a spot Bitcoin ETF or an Ethereum ETF. However, some analysts have also warned that a Bitcoin futures ETF could introduce more volatility and risk for investors, as well as higher fees and tracking errors.