Binance founder Changpeng Zhao gets prison sentence on money laundering

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Changpeng Zhao (also known as CZ) — the founder and former CEO of Binance, the world’s largest cryptocurrency exchange — has been sentenced to four months in jail for enabling money laundering on the platform.

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His sentencing follow the conviction and imprisonment of FTX co-founder Sam Bankman-Fried, who got a jail sentence of 25 years in March for committing fraud and stealing over $8 billion in customer money.

On Tuesday, at a federal court in Seattle, U.S. District Judge Richard Jones delivered a sentence to CZ for violating U.S. money laundering laws. Prosecutors requested a sentence of three years in prison, which is more than double the sentencing guideline of 18 months. They argued that Zhao’s misconduct was extensive and had far-reaching consequences. Meanwhile, Zhao’s lawyers wrote in their own sentencing memo that their client did not deserve jail time.

Some crypto experts, including Terrence Yang, director of Bitcoin financial services company Swan Bitcoin, are not impressed by the jail sentence.

“With light admitted-to crimes came incredibly light punishment. Like in SBF, this was another soft decision by a soft judge,” he wrote in an email. “While the DOJ just didn’t have enough goods on CZ to warrant 3 years, I can’t believe CZ is getting 4 months and not 18 months, which is what the sentencing guidelines allow.”

In November 2023, Binance and then-CEO CZ pleaded guilty to money laundering charges for allowing customers in other countries to transact in violation of US sanctions. As part of the settlement, the company agreed to pay $4.3 billion in fines, and CZ stepped down from his post. He also agreed to pay a fine of $50 million.

Richard Teng, Binance’s regional director markets head and a former Abu Dhabi regulator, has since taken over as CEO. He is making some major changes in the firm, like searching out a headquarter location, which counters Binance’s one-time stance that a decentralized firm does not need an office. The crypto exchange might be signaling to authorities that it is rebuilding itself after CZ’s departure.