Former Binance CEO Changpeng “CZ” Zhao was sentenced to four months in prison Tuesday, punished after pleading guilty to money laundering violations last year.
Zhao founded Binance in 2017, and under his leadership, the company grew into crypto’s largest exchange by trading volume—cementing Zhao’s presence as a key business figure in the nascent crypto industry. But the former CEO was forced to step down from Binance last November as part of a $4.3 billion settlement between him, the exchange, and U.S. law officials.
U.S. Justice Department officials said that Zhao created a company culture in which Binance’s growth was prioritized over compliance with U.S. financial rules. By serving American customers without the proper controls in place, funds linked to virtual theft and terrorism were able to flow through Binance undetected, officials said.
Binance agreed to exit the U.S. market entirely as part of the settlement. Additionally, Zhao agreed to personally pay a $50 million fine and to stay out of Binance operations for at least three years as he pleaded guilty to anti-money laundering violations.
Since flying to Seattle to enter that plea, Zhao has been prohibited from leaving the U.S. as travel restrictions were placed on him by Judge Jones. Federal prosecutors warned that Zhao—with an estimated wealth of $37 billion—was a flight risk.
When the U.S. Department of Justice argued last week that Zhao should be sentenced to three years in prison, its recommendation went beyond the 18 months suggested under federal sentencing guidelines. Citing Zhao’s “willful violation of U.S. law,” DoJ officials argued the harsher-than-expected sentence would “send a message […] to the world” and deter future bad actors.
In a filing, Zhao’s lawyers responded that probation was warranted instead of a prison, noting that incarceration has not been used as a punishment in similar cases. They cited former BitMEX CEO Arthur Hayes as an example, who was sentenced to six months of house arrest and two years’ probation after pleading guilty to violating the Bank Secrecy Act in early 2022.
“No defendant in a remotely similar BSA case has ever been sentenced to incarceration,” Zhao’s lawyers wrote. “Mr. Zhao should not be the first.”
Meanwhile, Binance faces an ongoing lawsuit brought by the Securities and Exchange Commission last year, which accuses the firm of flouting securities laws in the U.S. Last December, the firm moved to have the charges dismissed in a series of filings.
Edited by Ryan Ozawa.
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Source: https://decrypt.co/228674/binance-founder-changpeng-zhao-sentence-money-laundering
