Changpeng Zhao, the founder of world’s largest cryptocurrency exchange, Binance, has been sentenced to four months in prison on charges related to money laundering, a significant deviation from the three years sought by prosecutors.
The sentencing took place on Tuesday in a United States federal court in Seattle.
Zhao, known as CZ, faced charges not directly for money laundering, but for failing to establish an adequate anti-money laundering program at Binance. This case marks a pivotal moment in the U.S. government’s crackdown on financial crimes within the cryptocurrency sector.
In a heartfelt apology prior to his sentencing, Zhao expressed his remorse, saying, “Words cannot explain how deeply I regret my choices that result in me being before the Court.”
He stated in a letter to the judge, further assuring that, “Rest assured that it will never happen again.”
As part of a broader settlement with the federal government last fall, Binance consented to pay over $4 billion in fines and penalties. The company acknowledged its role in anti-money laundering violations, unlicensed money transmitting, and sanctions breaches.
Despite having a personal fortune estimated at nearly $40 billion by Bloomberg, Zhao has agreed to step down as CEO of Binance and will pay $200 million in personal fines.
The investigation into Binance revealed that the exchange facilitated transactions linked to various illicit activities, including child sex abuse, narcotics trafficking, and terrorist financing. Court documents highlighted internal communications at Binance, revealing a dismissive attitude toward compliance.
A compliance staffer’s message starkly noted, “We need a banner ‘is washing drug money too hard these days – come to Binance we got cake for you.’”
This sentencing follows closely on the heels of Sam Bankman-Fried’s 25-year prison term for his involvement in a multi-billion dollar fraud at FTX, underscoring a stricter enforcement stance by the Department of Justice against the crypto industry.
While crypto businesses strive to reform their image and integrate into mainstream finance, critics remain skeptical. Dennis Kelleher, CEO of the nonprofit Better Markets, criticized the light sentencing, stating, “’Crime pays’ is the message sent today by the Justice Department.”
LEADERSHIP reports that two Binance executives are currently facing similar charges in Nigeria.
