Binance Founder Changpeng Zhao Sentenced To Four Months In Prison

A Seattle court sentenced Changpeng Zhao, the founder of Binance, the world’s largest cryptocurrency exchange, to four months in prison. 

Zhao had begun the run that led to the discovery of the FTX fraud and pleaded guilty to breaking the law himself. 

Changpeng Zhao Sentenced 

The Binance founder was imprisoned for four months for failing to establish adequate anti-money laundering protections. Zhao had pleaded guilty to money laundering violations in November 2023 and had stepped down as Binance CEO. Zhao was personally fined $50 million, while Binance had to pay a staggering $4.3 billion fine. According to judge Richard Jones, Zhao prioritized Binance’s growth and profit over compliance with US laws and regulations. The judge stated that while he did not think Zhao would re-offend, the scale of the crime was notable. 

Judge Jones also told Zhao there were several mitigating factors in his sentencing, including the fact that he had cooperated with law enforcement during the investigation. The judge also noted that the court had received numerous letters testifying to Zhao’s character. 

Prosecution Sought Lengthier Sentence 

The United States Department of Justice had sought a 36-month sentence for Zhao, arguing that he had violated US laws on an “unprecedented scale.” Prosecutors argued that the sentencing should reflect the gravity of his crimes. On the other hand, Zhao’s defense lawyers argued that their client should only receive probation. 

“Mr Zhao deeply regrets his offense, and he has shown exceptional acceptance of responsibility and remediation.”

The Justice Department’s case against the Binance founder primarily revolved around the argument that he failed to comply with US anti-money laundering laws and file proper reports with various government agencies, including the Financial Crimes Enforcement Network. Prosecutors stated that this led to Binance becoming a hub for illicit financial transactions, including extremist groups, criminals, and trafficking. Prosecutors argued that Binance executives, including Zhao, also did not comply with the Bank Secrecy Act. 

As a result of these failures, Iranian entities were able to initiate transactions worth at least $1.1 million with US customers, clearly violating sanctions. Additionally, other sanctioned countries, including Cuba and Syria, were able to transact on the platform. According to prosecutors, Binance failed to report over 100,000 suspicious transactions to law enforcement agencies. 

“From the very beginning, Zhao and other Binance executives had engaged in a deliberate and calculated effort to profit from the US market without implementing the controls that are required by US law.”

One Of The Biggest Names In Crypto 

Zhao is one of the biggest names in the crypto space, having amassed billions of dollars as the head of Binance, which became the world’s largest and most popular cryptocurrency exchange. Zhao’s downfall resulted from closer scrutiny of the crypto space, which also led to fellow crypto billionaire Sam Bankman-Fried being sentenced to 25 years in prison. Zhao was the one who began the bank run on FTX, which led to the eventual downfall of the platform when he tweeted that he would be selling all his holdings of the FTX token in response to an emerging story.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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