WASHINGTON (Reuters) - The former chief executive of Binance, the world's largest cryptocurrency exchange, could face years in prison when he is sentenced on Tuesday after his guilty plea to violating U.S. money-laundering laws.

U.S. prosecutors have told District Judge Richard Jones in Seattle that they want Changpeng Zhao, who goes by "CZ," to serve twice the maximum 18 months recommended under federal guidelines.

Prosecutors said a tough sentence for the man once considered the most powerful person in the crypto industry would send a message that "the right choice, every time, is to comply with the law."

The hearing begins at 9 a.m. PDT (1600 GMT).

Robert Fisher, a partner at Nixon Peabody in Boston and a former federal prosecutor, said he was surprised prosecutors wanted a stiff sentence despite Zhao's plea, but suggested they might be trying to set an example given Zhao's high profile.

"It's unusual to ask for this much time above sentencing guidelines," he said. "They want this to serve as a deterrent."

Lawyers for Zhao requested probation, citing his "unflinching" acceptance of responsibility, and his having already paid a $50 million criminal fine.

They also said Zhao had not committed a crime before, and no defendant in a remotely similar case has been imprisoned.

Zhao would be the second major crypto boss to go to prison, after Sam Bankman-Fried was sentenced last month to 25 years for stealing $8 billion from customers of FTX, his now-bankrupt cryptocurrency exchange.

Bankman-Fried had pleaded not guilty and said that while he made mistakes he did not defraud customers. He has appealed his conviction and sentence.

Several other crypto moguls are also in U.S. authorities' crosshairs, after the collapse of crypto prices in 2022 exposed fraud and misconduct across the industry.

Zhao, 47, stepped down as Binance's chief in November, when he and the exchange he founded in 2017 admitted to evading money-laundering requirements under the Bank Secrecy Act.

Binance agreed to a $4.32 billion criminal penalty.

Prosecutors said Binance employed a "Wild West" model that welcomed criminals, and did not report more than 100,000 suspicious transactions with designated terrorist groups including Hamas, al-Qaeda and Islamic State.

They also said Zhao's exchange supported the sale ofchild sexual abuse materials and received a large portion of ransomware proceeds.

"He made a business decision that violating U.S. law wasthe best way to attract users, build his company, and line hispockets," prosecutors said.

Zhao has been free on a $175 million bond, and agreed notto appeal any sentence within federal guidelines. He also paid $50 million to the Commodity Futures Trading Commission.

(Writing by Michelle Price; reporting by Chris Prentice, Jonathan Stempel and Luc Cohen in New York; editing by Alistair Bell)