Changpeng Zhao, the founder and former CEO of one of the world’s largest crypto exchanges, Binance, is set to be released from prison on September 29, 2024. While the upcoming release will mark the end of his four-month jail term, Zhao will no longer be the face of Binance.
Zhao, popularly known as CZ, has been serving a four-month sentence for his involvement in regulatory failures concerning anti-money laundering (AML) procedures at Binance, the world’s largest cryptocurrency exchange by trading volume. Also, he was charged with violating the Bank Secrecy Act.
His sentence was handed down by the United States District Court in Seattle on April 30, 2024. The charges stemmed from Binance’s lack of effective Anti-Money Laundry (AML) protocols. This error left the platform vulnerable to illicit activities, including cybercrime and terrorism financing.
While the U.S. Department of Justice (DOJ) initially sought a three-year sentence, the court settled on a much shorter term, citing insufficient evidence linking Zhao directly to criminal activities.
This sentence followed years of scrutiny from U.S. regulators, culminating in Zhao stepping down as Binance’s chief executive officer in November 2023. Alongside his departure, Zhao paid a $50 million fine as part of a settlement with the DOJ. Binance itself was hit with a $4.3 billion fine for various regulatory violations.
Notably, Zhao’s release will occur at the Long Beach Residential Reentry Management Center in California, where he was transferred in August 2024. Upon his release, Zhao could be permanently enjoined from holding a position at Binance.
CZ banned from managing and operating Binance
Richard Teng, who took over leadership of Binance following CZ’s legal troubles, has commented on Zhao’s future at the exchange after his jail term.
In a Sept. 5 report published by Axios, Teng emphasized that the former Binance CEO has been permanently banned from operating the exchange or holding any management position at the firm.
Binance’s plea deal, filed in November 2023 corroborates Teng’s recent comments. In the plea deal, prosecutors were asked to consider that CZ was prohibited from “any present or future involvement in operating or managing” the crypto exchange.
Nonetheless, this step was noted as a consideration for prosecutors, recognizing it as part of Binance’s remedial measures. While it is unlikely that CZ will return to a direct leadership role at Binance, he may still provide advisory input.
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