Ex-Binance CEO Sentenced to 4 Months in Jail
01 May, 2024 ● Crypto people
A federal judge has sentenced former Binance CEO Changpeng “CZ” Zhao to four months in prison for violating U.S. money laundering laws.
During an April 30 hearing in the U.S. District Court for the Western District of Washington, Judge Richard Jones handed down the four-month sentence to Zhao.
Prosecutors had recommended a three-year sentence for Zhao's failure to maintain an effective Anti-Money Laundering (AML) program at Binance, a charge to which he pleaded guilty in November.
CZ’s lawyers had requested probation instead.
Reports from the courtroom indicated that Judge Jones found no evidence Zhao “was ever informed” of specific illegal activities at Binance, rejecting prosecutors’ request to increase the sentence from 18 months to three years.
In their final arguments, government attorneys suggested that CZ’s approach at Binance had been to seek forgiveness rather than permission and argued he should not profit from his actions.
“Incarceration is necessary to reflect the seriousness of the offense,” said prosecutor Kevin Mosley, who added:
“A probationary sentence here will incentivize others to break the law and to do it on the largest scale possible.”
Zhao's attorneys referred to sealed documents presented to the court as a “compelling factor” for the judge to consider during sentencing.
They argued that Judge Jones could impose probation for less than six months, citing concerns that Zhao’s wealth could make him a target in prison.
Before being sentenced, CZ apologized for his actions, saying he had “a lot of quiet time alone to think and reflect” and accepted responsibility for Binance’s failure to implement an effective AML program.
After Judge Jones' decision, Zhao said he would report to prison at a later date.
The hearing was initially postponed from February to follow the sentencing of former FTX CEO Sam Bankman-Fried, who was found guilty of seven felony charges in November and sentenced to 25 years in prison.
Bankman-Fried’s lawyers have filed a notice of appeal for both the conviction and sentence.
Many attendees of CZ’s hearing suggested the event was less high-profile than Bankman-Fried’s trial, which drew long lines outside the New York City courthouse.
Justice Department attorneys also emphasized that the crimes of Zhao and Bankman-Fried were distinct and should not be compared based on their personalities.
Zhao resigned as Binance CEO and pleaded guilty to the felony charge as part of a settlement with U.S. authorities, in which Binance agreed to pay $4.3 billion for “civil regulatory enforcement actions.”
This settlement did not affect an ongoing civil suit filed by the U.S. Securities and Exchange Commission against Binance, Binance.US, and CZ in June 2023.
After stepping down as CEO in November, CZ announced he would “stay off Twitter” and has not publicly commented on the criminal case.
In March, he launched Giggle Academy, an educational project focused on crypto and blockchain for young people. Richard Teng, former head of regional markets at Binance, succeeded Zhao as CEO.
Another significant figure in the crypto space, Alex Mashinsky, the former Celsius CEO, is scheduled to face charges in a U.S. criminal trial beginning in January 2025.
Sources:
https://cointelegraph.com/news/changpeng-zhao-binance-sentenced-prison
https://www.theverge.com/2024/4/30/24144807/binance-founders-sentencing-hearing-liveblog
