Binance Founder Changpeng Zhao Sentenced to 4 Months in Prison
Changpeng Zhao, the founder of cryptocurrency exchange Binance, was sentenced to four months in prison on Tuesday (April 30).
The sentencing came after Zhao pleaded guilty to charges of enabling money laundering at Binance, CNBC reported Tuesday.
The verdict was delivered in a federal court in Seattle by U.S. District Judge Richard Jones, who told Zhao, “You had the wherewithal, the finance capabilities, and the people power to make sure that every single regulation had to be complied with, and so you failed at that opportunity.”
Federal prosecutors had sought a sentence of three years, the defense had requested five months of probation, and the sentencing guidelines recommended a prison term of 12 to 18 months, according to the report.
Before receiving his sentence, Zhao apologized to the judge, saying, “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.”
The case against Zhao stemmed from a multiyear investigation into Binance, the report said. In November, Zhao reached a deal with the U.S. government to resolve the investigation, which led to his resignation as CEO of Binance. Despite stepping down, Zhao is reported to still hold an estimated 90% stake in the company.
The charges against Zhao included willfully failing to implement an effective anti-money laundering (AML) program as required by the Bank Secrecy Act, per the report. He was also accused of allowing Binance to process transactions involving proceeds of unlawful activity, including transactions between Americans and individuals in sanctioned jurisdictions.
As part of the settlement, Binance was ordered to pay $4.3 billion in fines and forfeiture, while Zhao agreed to pay a $50 million fine, according to the report.
The exchange also faces separate lawsuits from the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) over alleged mishandling of customer assets and operating an illegal, unregistered exchange in the U.S., per the report.
Binance’s new CEO, Richard Teng, told CNBC on April 9 that the cryptocurrency exchange is a more mature company now.
“As the company moves into greater maturity, we are looking at sustainability,” Teng said. “The direction of travel now is very clear toward much more compliance, which is why we’re building up a very robust compliance program.”
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