Changpeng Zhao, former head of the world’s largest cryptocurrency trading company, was sentenced to four months in jail on Tuesday in a Seattle court. Zhao pleaded guilty late last year to money laundering violations and resigned as CEO of Binance. The company itself was fined $4.3 billion. Zhao was fined $50 million last year.
Judge Richard Jones told Zhao there were a number of mitigating factors in his sentence, including the fact that he had cooperated with authorities. Jones also cited numerous letters the court had received that testified to Zhao’s character and stated that he did not believe Zhao was likely to reoffend.
The Justice Department requested a 36-month sentence for Zhao in a presentation last week, arguing that he “violated American law on an unprecedented scale” and that his “sentence should reflect the seriousness of his crimes.” Zhao’s defense lawyers argued that he should only receive probation.
“Mr. Zhao deeply regrets his crime and has demonstrated an exceptional acceptance of responsibility and reparation,” Zhao’s lawyers said. he said in his presentation before sentencing.
Zhao, who goes by CZ, has been one of the biggest names in cryptocurrency for years. He amassed billions of dollars as head of Binance, founding the exchange in 2017 and building it into a dominant player in the industry as cryptocurrency investments surged. Zhao’s fall coincided with broader legal scrutiny of the cryptocurrency industry, including the sentencing of fellow billionaire Sam Bankman-Fried to 25 years in prison this year for financial fraud.
The Justice Department’s case against Zhao revolved around his failure to comply with US anti-money laundering laws and to file adequate reports with government agencies such as the Financial Crimes Enforcement Network. In practice, prosecutors say that led to Binance becoming a hub for illicit financial transactions that included extremist groups, criminals and people trafficking in child sexual abuse materials.
Binance failed to report more than 100,000 suspicious transactions to authorities. prosecutors allegedincluding those involving US-designated terrorist groups such as Al Qaeda, Islamic State and Hamas.
“From the beginning, Zhao and other Binance executives had engaged in a deliberate and calculated effort to profit from the US market without implementing the controls required by US law,” Attorney General Merrick Garland said after Zhao pleaded guilty.
During the sentencing hearing, the probation department recommended that Zhao receive five months in prison. They emphasized trying to find a balance between a deterrent and something that was not unusually harsh. Zhao’s lawyers argued that the government was seeking three years in prison. I was out of tune with similar cases where the defendants did not receive prison sentences.
Zhao issued a brief statement during the hearing, telling the judge that he wanted to focus his efforts on an online education platform and that he had reflected on his actions.
after newsletter promotion
Zhao remained active in the lead-up to sentencing, traveling around the country and once met with Sam Altman, the CEO of OpenAI. Earlier this year, he announced to his nearly 9 million followers on the social media platform
In addition to the sentence, Zhao’s plea deal requires him to pay $50 million personally and for Binance to pay $4.3 billion in fines. The deal also carries potential U.S. immigration implications for Zhao, who is a Canadian and Emirati citizen but known for moving frequently between cities.
Prosecutors argued after his plea deal that Zhao was a flight risk because of his immense wealth, and a judge ruled that he had to remain in the United States pending sentencing. jones declared at sentencing hearing That Zhao should understand that wealth and power do not make a person immune from legal consequences, adding that Binance had turned a blind eye to criminal activity on its platform.
Few within cryptocurrencies ever came close to Zhao’s status within the industry. While Zhao’s former rival Bankman-Fried became a public face and courted politicians in Washington, Zhao’s wealth and influence over cryptocurrencies far surpassed him. Binance also played a major role in the downfall of Bankman-Fried’s FTX exchange, after Zhao’s decision in 2022 to liquidate Binance’s holdings of the FTX cryptocurrency itself accelerated investor concerns and hastened the rival exchange’s implosion. .