Former Binance CEO Sentenced to Jail for Money Laundering Violations
Former Binance chief executive Changpeng Zhao, also known as CZ, has been sentenced to four months in jail after pleading guilty to failing to establish adequate money laundering controls at the world’s largest cryptocurrency exchange. The 47-year-old surrendered to US authorities in November and agreed to resign as head of Binance, which he founded in 2017.
Appearing in federal court in Seattle, Zhao expressed regret for not introducing tougher “know your customer” policies at Binance. US prosecutors had sought a three-year prison term for Zhao, but his lawyers argued that probation would be sufficient for the first-time offender.
Binance remains the world’s biggest crypto exchange, but its market share has eroded from 60% to 42% over the past year. The US Department of Justice outlined how Zhao and Binance ignored compliance rules, allowing millions of dollars worth of crypto to be moved between the exchange and illegal entities.
The sentencing of Zhao comes amid a broader crackdown on the crypto industry by US authorities. His punishment pales in comparison to the 25 years handed to his rival, Sam Bankman-Fried, the FTX founder found guilty of fraud and money laundering. The Securities and Exchange Commission is also seeking fines from other crypto groups and individuals facing criminal charges.
Despite more than 160 letters from Zhao’s friends and family urging leniency, the judge handed down a four-month jail sentence. This case serves as a warning to other crypto industry leaders about the importance of compliance and money laundering controls.