Changpeng Zhao, the founder of Binance, the world’s leading cryptocurrency exchange, has been sentenced to four months in prison after pleading guilty to money-laundering charges. The sentence was handed down in a US federal court in Seattle and is lighter than the three-year sentence that prosecutors had sought.
Before the sentencing, Zhao, also known as CZ, apologized for the mistakes he made as the CEO of Binance. In a letter to the judge, he expressed deep regret and assured that such mistakes would never happen again.
As part of a coordinated settlement with the federal government, Binance agreed to pay over $4 billion in fines and penalties. The company admitted to engaging in anti-money laundering activities, unlicensed money transmitting, and sanctions violations. Zhao, who is 47 years old and has a personal fortune of nearly $40 billion, agreed to step down as CEO and pay $200 million in fines.
The investigation found that Binance allowed illicit activities on its platform, including transactions linked to child abuse, narcotics, and terrorist financing. The company also lacked protocols to identify and report money-laundering risks, and employees were aware that this oversight could attract criminals to the platform.
Zhao’s sentencing follows the recent sentencing of his former rival, Sam Bankman-Fried, to 25 years in federal prison for his involvement in a multibillion-dollar fraud through FTX, the second-largest crypto exchange before its collapse in 2022.
These consecutive sentences highlight the Department of Justice’s tougher stance on financial crimes, particularly in the crypto industry. While crypto investors and businesses aim to improve the industry’s reputation and move towards mainstream acceptance, skeptics remain skeptical and believe that the DOJ has not done enough to combat criminal activities in the $2 trillion cryptocurrency market.
Dennis Kelleher, CEO of the nonprofit Better Markets, criticized the Justice Department’s actions, stating that the charges against Zhao were not for money laundering but for lacking an anti-money laundering program, which he considers to be a minor punishment.
