Former Binance CEO, Changpeng “CZ” Zhao, has been sentenced to four months in prison by a federal judge for violating U.S. money laundering laws. Judge Richard Jones made the decision during an April 30 hearing in the U.S. District Court for the Western District of Washington. Prosecutors had recommended a three-year sentence for Zhao’s failure to maintain an effective Anti-Money Laundering (AML) program at Binance, to which he pleaded guilty in November. However, Zhao’s lawyers requested probation instead.
During the hearing, Judge Jones stated that there was no evidence that Zhao was aware of any specific illegal activities at Binance, countering the prosecutors’ request to increase the sentence from 18 months to three years. The government’s attorneys argued that Zhao had taken an approach of seeking forgiveness rather than permission at Binance, and should not be allowed to benefit from his actions.
Kevin Mosley, speaking for the prosecution, emphasized the need for incarceration to reflect the seriousness of the offense. He also warned that a probationary sentence would encourage others to break the law on a large scale. Zhao’s defense team referenced sealed court documents as a “compelling factor” for the judge to consider during sentencing. They argued that Judge Jones could impose probation for less than six months due to concerns about Zhao’s wealth making him a target in prison.
Prior to his sentencing, Zhao apologized for his actions and expressed remorse, acknowledging his responsibility for Binance’s failure to implement an effective AML program. Following Judge Jones’ decision, Zhao stated that he would present himself for imprisonment on a date to be determined.
The hearing, initially scheduled for February, was postponed to follow the sentencing of former FTX CEO, Sam Bankman-Fried, who was convicted of seven felony charges in November. Bankman-Fried received a 25-year prison sentence, but his lawyers have filed an appeal against both the conviction and sentence.
Although the attendance at Zhao’s hearing was not as high-profile as Bankman-Fried’s trial and sentencing, some attendees noted that the crimes should not be compared based on the personalities involved, as emphasized by the attorneys for the Justice Department.
Following his resignation as Binance CEO and his guilty plea, Zhao agreed to a settlement with U.S. authorities, in which Binance would pay $4.3 billion for “civil regulatory enforcement actions.” However, this settlement did not affect an ongoing civil lawsuit filed by the U.S. Securities and Exchange Commission against Binance, Binance.US, and Zhao in June 2023.
Since resigning as CEO, Zhao has refrained from commenting on the criminal case and stated his intention to “stay off Twitter.” In March, he launched Giggle Academy, an educational project focused on crypto and blockchain for young people. Richard Teng, Binance’s former head of regional markets, took over as CEO after Zhao’s departure.
Alex Mashinsky, the former CEO of Celsius, is expected to be the next prominent figure in the crypto industry to face charges after Bankman-Fried and Zhao. His criminal trial in the United States is scheduled to begin in January 2025.
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