Binance founder Changpeng Zhao was sentenced to 4 months in prison
Binance billionaire founder Changpeng Zhao was sentenced to four months in prison on April 30, after pleading guilty to allowing money laundering at his cryptocurrency exchange.
During the trial in Seattle federal court, judge Richard Jones emphasized that Changpeng Zhao (also known as CZ) had the financial and human capacity to ensure that all regulations were followed but failed to do so.
The sentence for the former Binance director was significantly lighter than the prosecutor's proposal. CZ's defense attorney recommended a sentence of 5 months probation.
"I'm sorry," Zhao told the judge before receiving the sentence, according to Reuters news agency.
"I believe the first step of accepting responsibility is to fully acknowledge the mistakes," Zhao said in court on April 30. "Here I did not implement an adequate anti-money laundering program... I now realize the severity of that mistake"
In November 2023, CZ reached an agreement with the US government to resolve a multi-year investigation into Binance, the world's largest cryptocurrency exchange. As part of the agreement, Zhao stepped down as CEO of Binance. Although he no longer runs the company, Zhao is said to hold about 90% of Binance's shares.
Zhao is accused of willfully failing to implement an effective anti-money laundering program as required by the Bank Secrecy Act and allowing Binance to process transactions involving proceeds of illegal activity, including both between Americans and individuals in sanctioned jurisdictions.
The US has asked Binance to pay $4.3 billion in fines and compensation. Zhao agreed to pay a fine of $50 million. Binance has been sued separately by the US Securities and Exchange Commission and the Commodity Futures Trading Commission (CFTC) over alleged mishandling of customer assets and the operation of an illegal, unregistered exchange. signed in the US. The action against Binance and its founder is a joint effort by the Department of Justice, CFTC, and Treasury
A Binance spokesperson said the company has made "significant compliance improvements," including anti-money laundering detection and "hiring key compliance staff." Prosecutors said that Zhao violated US law on an "unprecedented scale" and that he "willfully disregarded" Binance's legal responsibilities. In a memo dated April 23, prosecutors wrote, under Zhao's control, Binance operated under a "Wild West" model.
Zhao bet that he would not be caught, and if he were, the consequences would not be serious," the memo stated. "But Zhao was caught, and now the court will decide the price Zhao must pay. pay for his crimes".
Zhao had a much easier end than his former rival Sam Bankman-Fried, founder and former CEO of FTX. Bankman-Fried was sentenced to 25 years in prison for crimes related to the operations of his cryptocurrency exchange. Unlike Zhao and the allegations against Binance, FTX faces allegations of fraud and misuse of customer funds
Braden Perry, a former senior trial attorney for the CFTC, said that behavior is often considered deception and causes more people financial harm than non-compliance. "CZ's case appears to focus on regulatory and compliance failures, while SBF's case revolves around direct financial fraud and misconduct," Perry continued. "Failures in compliance, however serious, may be considered failures of oversight rather than active misconduct."
(According to CNBC)
