A federal judge sentenced Binance founder Changpeng Zhao (often known as “CZ”) to four months in prison, as the first technology/binance-founder-changpeng-zhao-sentenced.html” rel=”nofollow noopener” target=”_blank” data-ylk=”slk:reported by;elm:context_link;elmt:doNotAffiliate;cpos:1;pos:1;itc:0;sec:content-canvas”>reported by The New York Times. Prosecutors had recommended three years. Zhao pleaded guilty in November to violating the Bank Secrecy Act by failing to establish an anti-money laundering program.
The Justice Department accused Zhao of allowing criminal activities to flourish on the crypto exchange. “Binance turned a blind eye to his legal obligations in pursuit of profits. “His deliberate failures allowed money to flow to terrorists, cybercriminals and child abusers through his platform,” Treasury Secretary Janet Yellen said in November.
The government accused Binance of refusing to comply with US sanctions and failing to report suspicious transactions involving drugs and child sexual abuse materials. Prosecutors said in court that Zhao had told Binance employees that it was “better to ask for forgiveness than permission” while boasting that if Binance had obeyed the law, it would not be “as big as we are today.”
Under the terms of the plea deal, Binance agreed to forfeit $2.5 billion and pay a $1.8 billion fine. Zhao personally paid $50 million as part of the deal.
Although the charges differ, Zhao's sentence is dramatically shorter than the 25 years fellow crypto frontman Sam Bankman-Fried received in March. SBF, as he is often known, was convicted of seven counts of fraud and conspiracy for his role running the crypto platform FTX.
Zhao played a integral role in the Bankman-Fried crash and the broader crypto industry crash in the past 18 months. The Binance founder tweeted in November 2022 that his company would liquidate his holdings in the de facto FTX token. He said “recent revelations have come to light” and cited “ethical concerns” and “regulatory risks.” The posts not only crushed FTX but the cryptocurrency world in general. (They probably also helped attract the government's attention.) When FTX's wells ran dry following the platform's rapid collapse, Zhao briefly agreed to buy the company but quickly backed out.
Prosecutors said Zhao's crime carried a standard federal sentence of 12 to 18 months, but sought a three-year sentence, describing his crimes as “on an unprecedented scale.” But Judge Richard A. Jones saw it differently and sentenced him to a paltry one-twelfth of the term suggested by the government.
“This was not an error, this was not a regulatory error,” Justice Department attorney Kevin Mosley reportedly said in court Tuesday. “The violation of US law was not incidental to his plan to make as much money as possible. “Breaking the law was an integral part of that effort.”
