Former Binance CEO Changpeng Zhao Sentenced To 4 Months In Prison For Violation Of Money Laundering Law

Former Binance CEO Changpeng "CZ" Zhao, (photo: x @cz_binance)

JAKARTA - Federal judge has sentenced former Binance CEO Changpeng "CZ" Zhao to four months in prison for violating US money laundering laws.

In a hearing on April 30 at the US District Court for the Western Region of Washington, Judge Richard Jones sentenced Zhao to four months in prison. Prosecutors have recommended that the former Binance CEO serve a three-year sentence for not maintaining an effective Anti-Money Laundering (APU) program while on the crypto exchange. CZ pleaded guilty to the allegations last November. Lawyers CZ requested that he be given a trial period.

According to a report from the courtroom, Judge Jones said there was no evidence that Zhao had "ever been informed" of certain illegal activities in Binance, opposing prosecutors' request to increase the sentence from 18 months to three years. In the final argument, the government's lawyer suggested that the CZ approach at Binance was to apologize rather than permission, and he should not be allowed to benefit from his actions.

"Detention is needed to reflect the seriousness of violations," prosecutor Kevin Mosley said. "The sentence of probation here will provide incentives to others to violate the law and do so on the greatest possible scale."

Lawyers for Zhao referred to the information in documents presented to the court but were sealed to the public as a "binding factor" for judges to consider in the verdict. His legal team argues that Judge Jones could give an probationary period of less than six months, stating Zhao's wealth could make him a target in prison.

Before being sentenced, CZ apologized for his actions and said he "had plenty of time alone to think and reflect." He added that he accepted responsibility for Binance's failure to implement an effective APU program. Following Judge Jones' decision, Zhao said he would present himself on a date to be determined to report himself to prison.

The trial was initially postponed from February following the verdict for former FTX CEO Sam Bankman-Fried, who was found guilty of seven criminal charges in November. A judge sentenced Bankman-Fried to 25 years in prison, but his lawyers have filed an appeal against both the verdict and the sentence.

Many present at the CZ hearing suggested that the event was not as popular as the trial or the Bankman-Fried verdict, which drew long lines outside the New York City court building. Justice Department lawyers also rejected the comparison between the two crypto figures, adding that the crime was not about their personalities.

Zhao resigned as Binance CEO and pleaded guilty to criminal charges as part of a settlement with US authorities, in which the crypto exchange agreed to pay $4.3 billion for "acts of civil regulation enforcement." The deal did not affect the ongoing civil lawsuit with Binance, Binance.US, and CZ filed by the US Securities and Exchange Commission in June 2023.

After resigning as CEO in November, CZ said he planned to "stay away from Twitter" and had not publicly commented on the criminal case. In March, he launched the Giggle Academy, a crypto-related and blockchain education project for young people. Richard Teng, former head of the Binance regional market, became CEO after Zhao's departure.

Alex Mashinsky will be one of the next important figures in the crypto space to face charges after Bankman-Fried and Zhao. The criminal trial of former Celsius CEO in the United States is scheduled to begin in January 2025.