Binance founder CZ sentenced to 4 months in prison for money laundering

Binance founder and former CEO Changpeng Zhao, commonly known as “CZ,” was sentenced to a four-month jail term by a Seattle federal court on Tuesday, according to a report from The Wall Street Journal.

This verdict, lighter than what prosecutors had sought, aimed to convey a stern message regarding criminal activities within the cryptocurrency sector. The sentencing also brings closure to a year-long legal battle for Binance, the world’s largest crypto exchange, and CZ.

This decision came in the wake of CZ’s guilty plea to charges of money laundering late last year, a development that prompted him to step down from his leadership role at Binance. Alongside the jail time, CZ was also slapped with a hefty $50 million fine, while his brainchild, the world’s largest cryptocurrency trading platform, faced a staggering $4.3 billion penalty.

US District Judge Richard A. Jones minced no words in expressing disappointment at CZ’s failure to uphold US regulations, stressing, “You had a responsibility to comply with United States regulations. Not some but all. You failed at that opportunity.”

“You had a responsibility to comply with United States regulations. Not some but all,” U.S. District Judge Richard A. Jones said. “You failed at that opportunity.”

The 47-year-old billionaire, who holds the 38th spot on the Bloomberg Billionaires list, entered a guilty plea in November regarding charges of violating US anti-money laundering laws. Prosecutors alleged that Binance neglected to report upwards of 100,000 suspicious transactions spanning several years.

Late last year, Binance reached a $4.3 billion settlement with the Department of Justice. As part of the settlement, Zhao agreed to step down as the CEO of Binance, concluding a lengthy investigation into the world’s largest cryptocurrency exchange. The charges against Zhao and others included violations of the Bank Secrecy Act for not implementing an effective anti-money laundering program and willfully violating U.S. economic sanctions. The Justice Department asserted that this was a deliberate effort to profit from the U.S. market without adhering to required controls under U.S. law.

Prosecutors painted a damning picture of Zhao’s deliberate flouting of US laws, characterizing it as a calculated business strategy aimed at boosting user numbers, expanding the company’s reach, and enriching himself.

During a charged courtroom exchange, CZ’s legal team made a plea for leniency, advocating for no jail time and instead proposing a period of probation, citing their client’s unblemished criminal record, the Wall Street Journal reported.

Despite the plea, Judge Richard Jones voiced deep concern over Zhao’s approach of “better to ask forgiveness than permission,” ultimately settling on a lighter sentence than the 36 months sought by prosecutors. “Everything I see about your history and characteristics is mitigating and a positive nature,” the judge remarked, highlighting CZ’s clean record and low likelihood of reoffending.

In the aftermath, The Block referenced Better Markets CEO Dennis Kelleher, who condemned the handling of the case as a “miscarriage of justice,” arguing that prosecutors should have targeted other Binance employees as well. Kelleher lamented the DOJ’s decision to solely charge CZ with one count of violating the Bank Secrecy Act, despite the significant money laundering activities facilitated by Binance over the years.

CZ founded Binance in 2017 with Yi He. The cryptocurrency exchange platform combines digital technology and finance. The company provides access to exchange digital currency pairs on the market while maintaining security, and liquidity, enabling a safe and efficient deal with anyone, anytime and anywhere.

Before founding Binance, CEO Changpeng Zhao previously founded Fusion Systems in 2005 in Shanghai; the company that built high-frequency trading systems for brokers. In 2013 he joined Blockchain.info as the third member of the cryptocurrency wallet’s team. He also worked at OKCoin as CTO for less than a year, a platform for spot trading between fiat and digital assets.