Ex-Binance Boss Zhao Gets 4-Month Prison Term in Money Laundering Case

Binance founder Changpeng Zhao was handed a 4-month sentence in a money laundering plea, with a $50M fine called too light for the crypto billionaire.

Key Insights

  • Changpeng Zhao was sentenced to 4 months in prison for money laundering charges after pleading guilty.
  • Zhao apologized and said Binance has implemented anti-money laundering programs, while prosecutors sought 3 years in jail.
  • The sentence was criticized as too lenient given Zhao’s wealth, with a $50M fine called a “miscarriage of justice”.

SEATTLE (MarketsXplora) – Changpeng Zhao, the former CEO of major cryptocurrency exchange Binance, was sentenced to four months in federal prison on Tuesday after pleading guilty to money laundering charges last year, according to court reports.

The 47-year-old crypto billionaire, known as “CZ”, apologized in court and said he wanted to take responsibility for his “mistakes”, adding that Binance has implemented anti-money laundering safeguards and is cooperating with authorities.

U.S. prosecutors had sought a 36-month prison term for Zhao, accusing him of willfully violating U.S. laws by allowing Americans to trade on the Binance.com platform in order to boost profits.

“Zhao’s willful violation of U.S. law was no accident or oversight,” prosecutors said earlier. “He made a business decision that violating U.S. law was the best way to attract users, build his company, and line his pockets.”

However, Judge Richard Jones said he did not agree with the lengthy sentence recommended by prosecutors, noting Zhao was never informed of any illegal activity, according to courtroom reports.

Zhao’s lawyers had asked for probation, citing his remorse, acceptance of responsibility and his work in developing Binance as a force for “positive change”. They also warned Zhao could face security risks in certain facilities due to his wealth and notoriety.

In November, Zhao pleaded guilty to failing to implement an effective anti-money laundering program. He agreed to pay a $50 million fine, while Binance paid $4.3 billion – one of the largest corporate settlements ever.

Zhao stepped down as Binance CEO after the plea and was replaced by Richard Teng. Binance remains locked in a legal battle with the U.S. Securities and Exchange Commission, accused of operating as an unregistered exchange and mishandling customer funds.

More than 160 letters of support were filed for Zhao, including from crypto industry figures saying he could be a “productive member of society”. However, better markets watchdog CEO Dennis Kelleher blasted the sentence as a “miscarriage of justice”.

“For his crimes, DOJ fined him just $50 million, or just .1% of his net worth,” Kelleher said, citing estimates of Zhao’s $42.9 billion fortune.

Zhao’s relatively light punishment comes in contrast with the 25-year sentence handed last month to his former rival Sam Bankman-Fried, founder of failed crypto exchange FTX, for defrauding investors and customers.

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