The former head of the world’s largest cryptocurrency exchange, Binance, has been sentenced to four months in prison for allowing money laundering. Changpeng Zhao, also known as CZ, pleaded guilty to violating US anti-money laundering laws, which are meant to prevent financing of terrorist activities and funds going to sanctioned countries.
Zhao, who was once considered the most powerful person in the crypto world, was handed the sentence after a plea deal was reached with US prosecutors. They had initially sought a three-year prison term, which is twice the maximum recommended under federal sentencing guidelines. However, the defence argued for probation and no prison time for their client.
In addition to the prison term, Zhao has already paid a $50 million fine. Despite this, he remains a billionaire and the wealthiest executive in the crypto industry, with Forbes estimating his wealth at $33 billion.
During his sentencing at a court in Seattle, Zhao apologized for his actions, stating “I failed here. I deeply regret my failure and I am sorry.” However, district judge Richard Jones reminded him that he had the resources and power to ensure compliance with regulations, but failed to do so.
Zhao is the second major crypto boss to be sentenced to prison. Last month, the founder of FTX, Sam Bankman-Fried, was sentenced to 25 years for embezzling billions of dollars from the now-bankrupt crypto exchange. Bankman-Fried has appealed against his conviction and sentence.
Zhao stepped down from his position at Binance in November after admitting to evading requirements under the US Bank Secrecy Act. The company also agreed to a $4.3 billion penalty as prosecutors revealed that it had failed to report 100,000 suspicious transactions involving terrorist groups. Additionally, Binance was accused of supporting the sale of child sexual abuse material and receiving proceeds from ransomware attacks.
The US Justice Department brought this case as part of its efforts to crack down on criminal activity within the cryptocurrency industry, primarily associated with Bitcoin. Binance is also facing investigations and lawsuits from the Securities and Exchange Commission. The company had previously processed about two-thirds of all cryptocurrency transactions.
