Changpeng Zhao, founder and former CEO of the global cryptocurrency exchange Binance, has been sentenced to four months in prison for violating the United States anti-money laundering laws.
As earlier reported by Nitadel, the Binance founder’s sentencing hearing in the money laundering case took place on April 30 in a Seattle courthouse, presided over by U.S. Judge Richard Jones.
Binance founder’s 4-month sentence
After due process and fair hearings, the federal judge deemed it “appropriate and reasonable” for CZ to spend only 4 months in prison, rejecting both the 5-month probation recommendation and 36-month incarceration request from the U.S. Department of Justice (DOJ).
“There is no evidence that the defendant was ever informed” of illegal activity while at Binance, Judge Jones remarked, adding that CZ accepted “exceptional responsibility” for his mistakes.
According to the judge, the court also looked into the fact that CZ took significant steps to cooperate with U.S. law enforcement. However, he condemned Zhao’s failure to maintain a proper anti-money laundering program that created the potential for money laundering via the exchange. “You were the CEO of Binance. You made decisions,” the judge said.
Addressing Zhao, Jones said, “Everything I observe about you and your characteristics shows lenient attributes.” “You have the ability and will to rehabilitate because of this tough lesson,” he added.
In response, CZ said, “The first step to taking responsibility is to fully recognize the mistakes.” Further, he acknowledged that he failed to set up a KYC/AML program at Binance but that he’s tried to rectify that, and directed Binance to cooperate with the U.S. government. “I also recognize the importance of having a robust KYC/AML program,” Zhao added.
While the Probation/Pretrial Services office fixed no reporting date for CZ at press time, he swore to surrender himself whenever the date is determined.
Changpeng Zhao prison sentence buildup
The Binance founder’s 4-month sentence comes after Zhao pleaded guilty in November 2023 for failing to maintain an adequate AML program while leading Binance. As part of his plea deal, the 46-year-old billionaire stepped down as Binance’s CEO and agreed to pay a $50 million personal fine on top of the $4.3 billion in penalties imposed on the company.
The company’s settlement also resolved charges by the U.S. Securities and Exchange Commission (SEC) related to operating as an unregistered exchange and derivatives trading platform.
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Recall that U.S. federal prosecutors sought a three-year prison term for Zhao, twice the 18-month sentencing guideline laid in his plea deal. Despite acknowledging that CZ is way different from FTX founder Sam-Bankman Fried who was sentenced to 25 years in prison, the DOJ argued during the Tuesday hearing that the “scope and ramifications” of CZ’s misconduct were “massive.”
However, Zhao’s lawyers claimed no defendant in a similar case has ever received jail time, requesting he be spared incarceration. The defense attorneys cited the case of BitMex co-founder Authur Hayes which occurred in 2023.
While the Binance founder’s four-month sentence is lighter than prosecutors wanted, Zhao waived his right to appeal any prison time up to 18 months under the terms of his plea agreement. CZ Binance is expected to begin serving his sentence in the coming days or weeks.
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