At last week’s sentencing of Binance CEO Changpeng Zhao, the government recommended a 36-month prison sentence. Despite the serious nature of Zhao’s crimes – failing to maintain an effective anti-money laundering program, which enabled users to engage in transactions linked to narcotics, terrorist financing and child sex abuse, among others – the court imposed a much shorter sentence: four months imprisonment. The decision rested on the court’s belief that a higher sentence would have created “unwarranted sentence disparities” among similarly situated defendants. Zhao’s sentence stands as a powerful reminder of the importance of using this factor (contained in 18 U.S.C. § 3553(a)(6)) when arguing sentencing issues. In doing so, counsel should consider utilizing an often-overlooked tool maintained on the U.S. Sentencing Commission website.
Link to Zhao’s Plea Deal & Sentencing Zhao’s Plea Deal & Sentencing
Zhao founded the world’s largest cryptocurrency exchange company, Binance Holdings Limited (Binance). He pled guilty to an information charging a single count of failing to maintain an effective anti-money laundering program in violation of the Bank Secrecy Act (BSA) and agreed to pay a $50 million fine. As part of his guilty plea, he admitted to willfully violating the BSA to prioritize “growth, market share, and profits.” His guilty plea was made contemporaneously with Binance’s corporate plea in which it agreed to pay over $4 billion dollars in fines and penalties as a result of its corporate criminal conduct.
The parties disagreed about Zhao’s adjusted offense level. The government believed the range was 12-18 months; Zhao believed it was 10-16 months. At sentencing, the government sought a 36-month sentence—a number that was double the high end of the guidelines range. The government argued the upward variance was necessary to “balance” the sentencing factors in § 3553(a) and, in particular, to ensure deterrence of others who may be “tempted to put profits above compliance” with the law.
The judge disagreed and instead imposed a four-month prison sentence, which was a downward variance from the guidelines range. In doing so, the judge relied, in part, on Zhao’s sentencing disparity argument. Zhao cited a number of other defendants who received probation for similar conduct in both the district where his case was pending and other districts throughout the United States, including the BitMEX case prosecuted in the Southern District of New York. The BitMEX case presented largely identical circumstances – founders of a cryptocurrency exchange company who pled guilty to failing to implement appropriate anti-money laundering measures in violation of the BSA – yet the defendants in that case were sentenced to probation only. While the court declined to impose the probationary sentence the BitMEX founders received and Zhao requested, his sentencing disparity argument helped him avoid the extended prison sentence that the government sought.
Link to Using JSIN as a Tool to Make the Sentencing Disparity Argument Using JSIN as a Tool to Make the Sentencing Disparity Argument
Making disparity arguments at sentencing requires data. The “Judiciary Sentencing INformation” (JSIN) platform contained on the Sentencing Commission’s website provides ready and free access to this data, allowing users to determine the actual sentences a particular class of offenders receives under a particular guideline provision, nationwide over a five-year period.
To be sure, the JSIN data “does not reflect the Commission’s recommendation regarding the appropriate sentence to be imposed or represent the Commission’s official position on any issue or case[,]” nor does it “reflect the Commission’s position regarding the weight to be given, if any, to [that] sentencing information in a court’s determination of the appropriate sentence to be imposed.”
To access the data, JSIN users enter the primary guideline and then select the applicable cell in the sentencing table. The JSIN then creates a report that identifies the number of “similarly situated” defendants (i.e., those charged with the same offense who have the same adjusted offense level and criminal history) over the previous five years. The report lists:
- The percentages of those sentences that were within the range, above the range as the result of a downward departure or variance, below the range as the result of an upward departure of variance and imposed a results of substantial assistance departure under § 5K1.1;
- After excluding sentences imposed under § 5K1.1, the breakdown of sentences of imprisonment (in whole or part) versus sentences of probation or fine only; and
- For those defendants sentenced to imprisonment, the average and median lengths of imprisonment.
JSIN users can combine this data with that contained in the Sourcebook of Federal Sentencing Statistics. By tracking a table contained there entitled “Extent of Downward Variances by Type of Crime,” users can determine the mean and median percentage of decrease for downward variances broken down by type of crime (including Fraud/Theft/Embezzlement).
The Zhao sentence is a powerful reminder of the importance of not just making sentencing disparity arguments but backing them up with data. While the JSIN certainly has its limitations, the data it contains is unquestionably accurate. Counsel who understands how to access that information and present it to the court in a coherent and compelling manner are best positioned to protect their clients’ interests.