Former Binance CEO Changpeng “CZ” Zhao has been sentenced to four months in prison for violating money laundering laws in the United States. The sentencing came after years of investigations by U.S. authorities. However, during the hearing, Judge Richard Jones stated that there was no evidence to suggest that Zhao had knowledge of any illegal activities at Binance. The Department of Justice had recommended increasing the sentencing guideline, but the judge rejected this suggestion.
The four-month prison sentence, along with billions of dollars in fines, may seem lenient given the extensive investigations into Binance and its crypto empire over the past six years. From 2018 to 2024, Binance faced several probes from agencies such as the DOJ, the Securities and Exchange Commission (SEC), and the Commodity Futures Trading Commission (CFTC).
The timeline of events highlights the crackdown on Binance:
– February 2018: The Department of Justice initiates an investigation into Binance’s compliance with U.S. Anti-Money Laundering laws and sanctions. Charges related to unlicensed money transmission, money laundering conspiracy, and criminal sanctions violations were being investigated.
– March 2021: The CFTC investigates whether Binance offered crypto derivatives to U.S. customers without registering with the agency.
– February 2022: The SEC launches an investigation into the connection between Binance.US and trading firms Sigma Chain AG and Merit Peak, focusing on how these firms disclosed potential links to users.
– June 2022: The SEC initiates another investigation into Binance Holdings’ 2017 initial coin offering (ICO) for potential unregistered securities sales.
– March 2023: The SEC and CFTC sue Binance and CZ for trading irregularities and market manipulation. Binance’s daily trading volume at the time exceeded $8.5 billion. Zhao denies the allegations, stating that the exchange did not trade for profit or manipulate the market.
– May 2023: The DOJ launches another investigation on Binance, focusing on potential violations of U.S. sanctions by allowing Russians to access the exchange. Binance continued to operate in Russia until September, despite imposing restrictions after sanctions were imposed.
– June 2023: The SEC files charges against Binance and CZ for violations of securities law, including inadequate market oversight and potential wash trading. The suit alleges that Binance failed to restrict U.S. investors from using Binance.com and that Binance.US engaged in wash trading. It also claims that funds from Binance and Binance.US were commingled into an account controlled by CZ-associated Merit Peak Limited.
– July 2023: Senior executives on the Binance.US team leave the company, leading to a wave of departures across Binance’s firms.
– August 2023: The DOJ expresses concerns about a potential bank run affecting consumers as it considers fraud charges against Binance. Alternatives to criminal charges, such as fines or non-prosecution agreements, are being considered by the DOJ to mitigate harm to customers.
– September 2023: Binance.US lays off a third of its workforce and CEO Brian Shroder resigns. The SEC complains about Binance’s lack of cooperation in the discovery process.
– November 2023: CZ steps down as CEO following a $4.3-billion settlement with U.S. authorities. The settlement includes fines for violations such as failing to maintain an effective Anti-Money Laundering program. Richard Teng becomes the new CEO of Binance. As part of the settlement, Zhao pleads guilty to one felony charge, taking responsibility for his mistakes.
In conclusion, the former CEO of Binance, CZ Zhao, has been sentenced to four months in prison for violating money laundering laws in the United States. This comes after years of investigations by U.S. authorities into Binance and its crypto empire. Despite the extensive probes and allegations, Zhao maintains that he was not aware of any illegal activities at Binance.