Binance’s billionaire founder, Changpeng Zhao, was sentenced to four months in prison after pleading guilty to charges of enabling money laundering at his crypto exchange. The sentence was less than the three years sought by prosecutors, with the defense asking for probation. Zhao, also known as CZ, stepped down as CEO as part of a settlement with the U.S. government, though he still holds an estimated 90% stake in Binance. He was accused of failing to implement an effective anti-money laundering program and allowing Binance to process transactions involving proceeds of unlawful activity.
Zhao wore a dark navy suit to court and was accused of willfully failing to implement anti-money laundering measures as required by the Bank Secrecy Act. The U.S. ordered Binance to pay $4.3 billion in fines and forfeiture, with Zhao agreeing to pay a $50 million fine. Binance has also been sued by the SEC and CFTC for mishandling customer assets and operating an illegal, unregistered exchange in the U.S. The Department of Justice, CFTC, and Treasury Department were involved in the action against Binance and Zhao, but the SEC was notably absent. Binance has stated that they are proud of their compliance culture and have made significant enhancements to anti-money laundering detection.
A Binance spokesperson highlighted the company’s focus on compliance, security, and transparency, mentioning improvements in anti-money laundering detection and hiring key compliance personnel. A lawyer for Zhao did not immediately respond to requests for comment. Prosecutors claimed Zhao violated U.S. law on an unprecedented scale, operating Binance on a “Wild West” model under his control. They stated that Zhao bet he would not get caught and downplayed the consequences if he did, but he was caught and must now face the consequences for his actions.
Prosecutors characterized Zhao’s actions as deliberate disregard for Binance’s legal responsibilities, emphasizing that he must face the consequences for his crimes. They alleged that Zhao operated Binance with the belief that he would not face serious consequences, but now the court will determine the price he must pay. The new CEO of Binance is focused on building a robust compliance program, in response to the legal challenges faced by the exchange. Binance has made significant efforts to enhance compliance measures and improve anti-money laundering detection, signaling a commitment to evolving and maintaining a culture of compliance, security, and transparency.
