Changpeng Zhao, founder and former CEO of major cryptocurrency exchange Binance, was sentenced to 4 months in prison on Tuesday for failing to implement proper anti-money laundering (AML) safeguards.
Zhao, known in the industry as “CZ,” pleaded guilty to the charges in November 2023. During the sentencing hearing, Judge Richard Jones acknowledged that Zhao had accepted responsibility and that Binance had cooperated with the investigation. However, Jones also noted the seriousness of the offense and the need to deter future violations within the cryptocurrency industry.
Prosecutors had sought a three-year sentence, arguing that failing to comply with AML rules was a major crime. Zhao’s defense team countered that lesser penalties, such as probation, were more appropriate.
In addition to the jail time, Zhao has already paid a $50 million fine, and Binance has agreed to a $4 billion settlement. Despite these penalties, estimates suggest Zhao remains a billionaire.
Legal experts believe the sentence is intended to send a message to the entire cryptocurrency industry about the importance of AML compliance. While some argue a jail sentence may be excessive, others believe it’s a necessary step to ensure the industry operates within legal boundaries.
Zhao stated his intention to serve his time and focus on education initiatives related to blockchain technology upon his release. He also emphasized the importance of compliance for the future of cryptocurrency.
“I would like to thank everyone for your care and support, be it writing letters, showing support on X, or in any other form. They all mean a lot to me and keep me strong. I will do my time, conclude this phase and focus on the next chapter of my life (education). I will remain a passive investor (and holder) in crypto. Our industry has entered a new phase. Compliance is super important. A silver lining of this whole process is that Binance has been under the microscope. And funds are SAFU. Protect users!,” he said in a post on X.
Changpeng Zhao and Binance still face a separate lawsuit from the U.S. Securities and Exchange Commission over alleged misuse of customer funds, which they deny.
