Former Binance CEO Changpeng Zhao begins jailing in California | Wilnesh News

Changpeng Zhao, the billionaire founder of Binance, has reported to a low-security federal prison in Lompoc, California. CNBC contacted the defense team at law firm Latham & Watkins and confirmed that the former cryptocurrency executive is now in custody.

Zhao was sentenced to four months in prison in April after pleading guilty to charges of money laundering at his cryptocurrency exchange.

The former Binance president’s sentence was significantly less than the three-year sentence federal prosecutors had been seeking. The defense asked for five months of probation. Sentencing guidelines call for a sentence of 12 to 18 months in prison.

“I’m sorry,” Zhao told U.S. District Judge Richard Jones before receiving his sentence, Reuters reported.

“I think the first step to taking responsibility is to fully recognize the mistake,” Zhao reportedly said in court. “Here, I failed to implement a proper anti-money laundering program…I now realize the seriousness of this mistake. “

In November last year, Zhao, commonly known as “CZ,” 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.

Although Zhao no longer runs the company, he is widely reported to own approximately 90% of Binance.

The scope of his alleged crimes includes 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 transactions between U.S. persons and individuals in sanctioned jurisdictions.

The United States ordered Binance to pay $4.3 billion in fines and confiscations. Zhao agreed to pay a $50 million fine.

FTX founder and former CEO Sam Bankman-Fried is also serving a sentence in a US federal prison. Dooming his cryptocurrency exchange and related hedge fund Alameda Research to failure. Bankman-Fried was also ordered to pay $11 billion in forfeitures in a decision in Manhattan federal court.

Unlike Zhao, Bankman-Fried did not strike a deal with the government. Instead, other members of his top management cooperated with prosecutors. Caroline Ellison, the former Alameda executive and Bankman-Fried’s ex-girlfriend, was the star witness during the government’s criminal trial.

— CNBC’s Jim Forkin contributed to this report.