Changpeng "CZ" Zhao, the former CEO of crypto exchange Binance, has been sentenced to four months in prison for not maintaining an effective anti-money laundering (AML) program at the crypto exchange.
This verdict was issued by Judge Richard Jones in the US District Court for the Western District of Washington on April 30, following Zhao's guilty plea to violating US money laundering laws.
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While the prosecution had recommended a three-year prison term, Judge Jones acknowledged no direct evidence that Zhao was informed of illegal activities within Binance and, therefore, opted for a more lenient sentence.
Kevin Mosley, speaking for the prosecution, emphasized the need for incarceration to reflect the severity of the offense, stating:
A probationary sentence here will incentivize others to break the law and to do it in the largest scale possible.
Zhao's legal team presented sealed documents to the court, which they described as a "compelling factor" for consideration in their plea for a probationary sentence of less than six months. They also expressed concerns about Zhao's safety in prison, given his wealth and high profile.
Prior to receiving his sentence, Zhao expressed regret for his oversight at Binance, stating that he had taken the time to reflect and accepted responsibility for the failures in Binance's AML procedures.
CZ's guilty plea was part of a settlement with US authorities, where Binance agreed to pay $4.3 billion to resolve civil regulatory enforcement issues. This settlement, however, does not conclude an ongoing civil lawsuit involving Zhao, Binance, and Binance.US, led by the US Securities and Exchange Commission.
Despite the legal proceedings, Zhao remained active in the crypto community, announcing Giggle Academy, an educational project introducing young people to technology.
Nonetheless, the case highlights the judicial emphasis on strict compliance and accountability within the crypto industry.
Another high-profile crypto figure who recently received time in prison is Sam Bankman-Fried, the former CEO of FTX. However, he appealed against his conviction and the 25-year sentence.
