Changpeng Zhao, founder of crypto exchange Binance, was sentenced on Tuesday to four months in prison after pleading guilty to money laundering last November.
The sentence is far below what prosecutors had suggested—and lower than the guidelines for the crimes (which were 12-18 months). Zhao will not be immediately remanded into custody.
“You had a responsibility to comply with United States regulations. Not some, but all,” U.S. District Judge Richard A. Jones told Zhao in the hearing. “You failed at that opportunity.”
Addressing the court before the sentence was handed down, Zhao said, “I deeply regret my behavior and I’m sorry. I fully recognize the seriousness of the mistakes I made. I learned an important lesson here I will carry with me.”
Zhao, better known in the crypto world as “CZ,” was, like FTX founder Sam Bankman-Fried, once royalty in the crypto world. Zhao built Binance into one of the largest crypto exchanges. When he stepped down from the top spot at the company in November as part of his plea deal with the Justice Department, Binance had assets valued at over $65 billion.
While Bankman-Fried’s legal problems resulted in the collapse of FTX, Binance has continued to operate without Zhao.
Zhao, who founded Binance in 2017, will begin his sentence with a personal fortune estimated at $43 billion, which would make him the richest person to ever be incarcerated. And though he might not run Binance anymore, he still has some influence over the company since the board of directors is made up of his friends; and Yi He, the mother of his children, is the company’s cofounder.
A Canadian national, Zhao pleaded guilty last November to failing to maintain an effective anti-money laundering (AML) program at the exchange. Binance also admitted to engaging in anti-money laundering, unlicensed money transmissions, and sanctions violations, all of which came with a $4.3 billion fine.
“Binance became the world’s largest cryptocurrency exchange in part because of the crimes it committed—now it is paying one of the largest corporate penalties in U.S. history,” said Attorney General Merrick B. Garland at the time of Zhao’s guilty plea.
Prosecutors said Zhao “violated U.S. law on an unprecedented scale,” and had asked the judge to impose a three-year sentence, which would have been higher than suggested under advisory guidelines.“ [Zhao] led a massive financial institution that, as of 2022, processed trillions of dollars in cryptocurrency trades per year and massively profited from the U.S. financial system, U.S. businesses, and U.S. customers—all without playing by U.S. rules,” the prosecutors wrote in a sentencing memorandum. “He ran Binance with deliberate disregard for the company’s legal responsibilities and for its capacity to cause significant harm. . . . Zhao’s sentence should reflect the gravity of his crimes.”
Zhao’s defense team argued for no prison time, pointing to his lack of a criminal record, charitable endeavors, and the fact that he had owned up to his mistakes, calling it an “extraordinary acceptance of responsibility.” They suggested probation would be a more suitable punishment.
Jones, in his ruling, said he did not believe Zhao was likely to commit these offenses again, but added that the scale of the crime was “notable,” which necessitated the sentence. Zhao had previously agreed not to appeal any sentence of less than 18 months.
Login to add comment
Other posts in this group
Ride-hailing companies Uber and Lyft said Monday they will keep operating in
California’s top state court on Tuesday will consider a labor union’s challenge to a ballot measure allowing app-based services such as Uber and Lyft to classify drivers in the state a
For the third time in roughly a week, a major tech company is showing off its near-term plans for the future of generative artificial intelligence. This time, it’s Microsoft’s turn.
The
South Korea is set to host a mini-summit this week on risks and regulation of artificial intelligence, following up on an
