According to attorney, Changpeng Zhao’s 4-month imprisonment serves as a “preventive measure for the public.”

Binance founder Changpeng “CZ” Zhao’s recent four-month prison sentence for Anti-Money Laundering (AML) violations is seen as a move to deter the crypto industry from noncompliance, according to lawyer Aaron Lane. Lane, a senior law lecturer at Melbourne’s RMIT Blockchain Innovation Hub, stated that “general deterrence appears to be the main rationale behind the term of imprisonment.” He also acknowledged that the charges against Zhao were justified, but they were of a regulatory nature and not comparable to the fraud conviction that resulted in a 25-year prison sentence for FTX co-founder Sam Bankman-Fried. Although the sentence was lower than the recommended guideline and the prosecution’s request, Lane explained that judges have broad discretion to determine a fair sentence, even with a plea deal. David Chung, the founding director of law firm Creo Legal, sees Zhao’s imprisonment as a signal that the unregulated days of the crypto industry are over. However, Chung clarified that Zhao pleaded guilty to noncompliance with AML regulations, not money laundering. Following his sentencing, Zhao expressed gratitude to his supporters and stated that he would serve his time in jail and focus on education in the next phase of his life. He emphasized the importance of compliance with existing laws and highlighted that Binance user funds were safe despite the scrutiny faced by the crypto exchange. Zhao and Binance are currently facing a lawsuit from the U.S. Securities and Exchange Commission, which alleges that Zhao misappropriated customer funds, a charge that Binance denies.