Former Binance CEO Changpeng Zhao arrives at the federal court in Seattle, Washington, USA, on Tuesday, April 30, 2024.
David Ryder | Bloomberg | Getty Images
Changpeng Zhao, the billionaire founder of Binance, was sentenced to four months in prison on Tuesday after pleading guilty to charges of money laundering at his cryptocurrency exchange.
Zhao’s sentence in federal court in Seattle was significantly less than the three-year sentence federal prosecutors had sought. The defense asked for five months of probation. Sentencing guidelines call for a sentence of 12 to 18 months in prison.
In November, Zhao reached an agreement with the U.S. government to resolve a multi-year investigation into Binance, the world’s largest cryptocurrency exchange. As part of the settlement, Zhao resigned as CEO of the company.
Zhao, Wearing a dark navy suit and light blue tie in court, he is accused of knowingly failing to implement an effective anti-money laundering program as required by the Bank Secrecy Act and allowing Binance to process transactions involving the proceeds of illegal activities, including between Americans and between individuals within the sanctioning jurisdiction.
The United States ordered Binance to pay $4.3 billion in fines and confiscations. Zhao agreed to pay a $50 million fine.
Binance has been sued by the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission for allegedly mishandling customer assets and operating an illegal, unregistered exchange in the United States.
The action against Binance and its founder was jointly initiated by the Department of Justice, the U.S. Commodity Futures Trading Commission, and the Treasury Department, although the U.S. Securities and Exchange Commission was notably absent.
Former Binance CEO Changpeng Zhao arrives at the federal court in Seattle, Washington, USA, on Tuesday, April 30, 2024.
David Ryder | Bloomberg | Getty Images
Financial crime ‘unprecedented’
Prosecutors said Zhao’s violations of U.S. law were “unprecedented” in scale and showed “willful disregard” for Binance’s legal responsibilities.
In an April 23 memo, prosecutors said that under Zhao’s control, Binance operated in a “Wild West” mode.
“Zhao was betting that he wouldn’t be caught, and that if he was caught, the consequences wouldn’t be as serious as the crime,” the memo said. “But Zhao was caught, and now the courts will decide what price Zhao should pay for his crimes. “
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