Changpeng Zhao Sentenced to Four Months in Prison for Violating Money Laundering Laws
Changpeng Zhao, the former CEO of Binance, was sentenced to four months in prison on Tuesday after pleading guilty to violating U.S. money-laundering laws. The sentence was imposed by U.S. District Judge Richard Jones in Seattle, who rejected prosecutors' request for a three-year term.
Zhao, once considered the most powerful figure in the crypto industry, is the second major crypto boss to be sentenced to prison. In March, Sam Bankman-Fried received 25 years behind bars for stealing $8 billion from customers of his now-bankrupt FTX exchange.
Before handing down the sentence, Judge Jones criticized Zhao for prioritizing growth and profits over compliance with U.S. laws. "You had the resources and the power to ensure compliance with every regulation, and you failed," he said.
Prosecutors argued that Binance operated under a "Wild West" model, welcoming criminals and failing to report over 100,000 suspicious transactions, including those involving designated terrorist groups. They also accused the exchange of facilitating the sale of child sexual abuse materials and receiving a significant portion of ransomware proceeds. Binance agreed to a $4.32 billion penalty.
Zhao expressed remorse for his actions, stating, "I believe the first step of taking responsibility is to fully recognize the mistakes. Here I failed to implement an adequate anti-money-laundering program. ... I realize now the seriousness of that mistake."
Defense lawyers for Zhao requested probation, citing his acceptance of responsibility and payment of a $50 million criminal fine. They also pointed to other individuals who admitted similar wrongdoing, such as BitMEX founder Arthur Hayes, who avoided prison sentences.
Judge Jones ultimately decided against a three-year sentence, stating that prosecutors did not demonstrate Zhao's prior knowledge of the illegal activity. He sentenced Zhao to four months in prison, followed by three years of supervised release.
Zhao's sentencing marks another significant development in the ongoing crackdown on misconduct within the crypto industry, following the collapse of crypto prices in 2022. Several other crypto moguls remain under investigation by U.S. authorities.