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LATEST NEWS

  • Marijan Hassan - Tech Journalist

Binance founder, Changpeng Zhao, sentenced to four months in prison


Changpeng Zhao or CZ as he is popularly known was, last week, sentenced to four months. This is after he was charged with failure to establish adequate anti-money laundering protections in November last year for which he pleaded guilty.



Judge Richard Jones, who presided over the case, criticized Zhao for prioritizing Binance's growth and profits over compliance with US laws and regulations. While Judge Jones doesn't believe Zhao is likely to re-offend, he emphasized the scale of the crime, calling attention to the significant harm caused.


In addition to the prison sentence, Zhao has agreed to pay a fine of $50 million. This is only a fraction of Zhao’s estimated $33 billion net worth. He has also agreed not to appeal any sentence of up to 18 months.


Binance is still the biggest crypto exchange even amidst the series of legal battles it’s been fighting. Two Binance officials are still being held in Nigeria awaiting trial for the company's involvement in manipulating the country’s forex market.


As part of his plea agreement, CZ agreed to step down as Binance CEO, although he remains the controlling shareholder.


The prosecutors were determined to use CZ as an example and had they had their way, he would have received a 3-year sentencing – double the sentencing guideline of 18 months. They argued that his actions went beyond mere legal violation as they also harmed US national security.


According to prosecutors, Binance allowed sanctions violations of more than $898 million, and “violated US law on an unprecedented scale.”. They specifically highlighted a $1.1 million transaction between Iran and the US that violated sanctions. Other countries that were mentioned include Cuba and Syria.


On their end, Zhao's lawyers argued that he deserved no jail time, citing that “no defendant in a remotely similar BSA case has ever been sentenced to incarceration.” They also pointed out that CZ was a family man and had already been away from his wife and kids for over 5 months.


Additionally, they mentioned that Binance had taken measures to correct its wrong.


It was Zhao who tipped the first domino in the fall of FTX and Sam Bankman Fried when he announced that his company would be trading back a sizable investment it had made on FTX. Investigations into the crypto exchange unearthed one of the biggest cases of fraud in current times.


Bankman-Fried was sentenced to 25 years in prison in March after being found guilty in a jury trial of seven counts of conspiracy and fraud charges.


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