Binance Founder Changpeng Zhao Sentenced for 4 Months on Money-Laundering Charges

On Tuesday, Changpeng Zhao, the founder of the world’s leading cryptocurrency exchange, received a four-month prison sentence after pleading guilty to money-laundering charges last year.

This sentence, issued in a US federal court in Seattle, is significantly lighter than the three years that prosecutors had sought.

Ahead of the sentencing hearing, Zhao, also known as CZ, expressed regret for his actions as the CEO of Binance, the cryptocurrency exchange he established in 2017.

“Words cannot explain how deeply I regret my choices that result in me being before the Court,” he conveyed in a letter to the judge. “Rest assured that it will never happen again.”

Binance Company (Credits: Binance)

As part of a coordinated settlement with the federal government last fall, Binance agreed to pay over $4 billion in fines and other penalties.

The company admitted to involvement in anti-money laundering activities, unlicensed money transmitting, and sanctions violations. Zhao, 47, with a personal fortune nearing $40 billion, as per Bloomberg, agreed to step down as CEO and pay $200 million in fines.

Following a lengthy investigation, US authorities in November accused Binance, the world’s largest crypto exchange, of enabling bad actors on its platform, facilitating transactions associated with child exploitation, drug trafficking, and terrorist financing.

Furthermore, Binance lacked protocols to identify or report transactions posing money-laundering risks, and employees were aware that such lapses invited criminal activity.

According to court documents, a Binance compliance staffer remarked, “We need a banner ‘is washing drug money too hard these days – come to Binance we got a cake for you.'”

Binance Founder: Changpeng Zhao (Credits: Benoit Tessier)

Zhao’s sentencing closely follows the 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 sudden collapse in the fall of 2022.

These consecutive sentences highlight the Department of Justice’s tougher stance against financial crimes, especially within the crypto sphere. While crypto investors and businesses aim to rebrand the industry as mainstream and legitimate, skeptics often view the $2 trillion industry with suspicion.

They argue that the DOJ’s efforts against crypto-related crimes remain insufficient. “‘Crime pays’ is the message sent today by the Justice Department,” remarked Dennis Kelleher, CEO of the nonprofit Better Markets, in a statement on Tuesday.

“It didn’t even charge CZ with money laundering; he was only charged with not having an anti-money laundering program. That’s less than a slap on the wrist.”

Josh Alba
Josh Alba
Josh Alba stands at the forefront of contemporary business journalism, his words weaving narratives that illuminate the intricate workings of the corporate world. With a keen eye for detail and a penchant for uncovering the underlying stories behind financial trends, Josh has established himself as a trusted authority in business writing. Drawing from his wealth of experience and relentless pursuit of truth, Josh delivers insights that resonate with readers across industries.
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