Changpeng Zhao, the founder of Binance, the largest cryptocurrency exchange in the world, has been sentenced to four months in prison. Judge Richard Jones oversaw the sentencing hearing in the Western District of Washington and decided to give Zhao a lighter sentence than the three years requested by the prosecution.
In November, Zhao, also known as CZ, pleaded guilty to intentionally breaking anti-money laundering regulations that allowed for hundreds of millions of dollars in transactions involving sanctioned entities like Iran and Cuba to flow through the Binance platform. As part of the plea deal, Zhao had to step down as CEO of Binance, pay a $150 million fine, and have the company pay a $4.3 billion penalty.
The US Department of Justice accused Zhao of knowingly violating US law to attract users, grow his company, and profit personally. While prosecutors asked for a 36-month prison sentence, Zhao’s defense argued for probation, highlighting the absence of incarceration in similar cases.
In a letter to the judge before the hearing, Zhao expressed remorse for his actions and took responsibility for the lack of a proper compliance program at Binance. Despite his guilty plea and apology, the judge had to take into account Zhao’s character, likelihood of repeat offenses, and other factors in determining the appropriate sentence.
Zhao’s case is not directly comparable to that of Sam Bankman-Fried, the founder of bankrupt crypto exchange FTX, who was recently sentenced to 25 years in prison for fraudulent practices. Despite their rivalry in the exchange market, their legal troubles differ significantly.
Zhao will not lose his accumulated wealth from Binance as part of his sentence, as he retains a significant stake in the company even after stepping down as CEO. The Department of Justice views this conviction as a significant win in its pursuit of enforcing anti-money laundering regulations in the crypto industry.
