Binance founder Changpeng Zhao is sentenced to 4 months in prison on money-laundering charges

new York
CNN
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Changpeng Zhao, the founder of the world’s first cryptocurrency exchange, was sentenced to four months in prison on Tuesday after pleading guilty last year to money laundering charges.

The sentence, pronounced in a US federal court in Seattle, is much lighter than the three years recommended by prosecutors.

Before the sentencing hearing on Tuesday, Zhao, who goes by CZ, apologized for mistakes he made as CEO of Binance, the crypto exchange he founded in 2017.

“Words cannot explain how much I regret my choices that brought me before the Court,” he said in a letter to the judge. “Rest assured this will never happen again.”

Binance agreed to pay more than $4 billion in fines and other penalties as part of a coordinated settlement with the federal government last fall. The company admitted to engaging in anti-money laundering activities, unlicensed money transfers and sanctions violations.

Zhao, who is 47 and has a personal fortune of nearly $40 billion, according to Bloomberg, agreed to resign as CEO and pay $200 million in fines.

Following a years-long investigation, US authorities said in November that Binance – the world’s largest cryptocurrency exchange – had allowed bad actors onto the platform, enabling transactions linked to sexual abuse on children, drugs and the financing of terrorism.

Additionally, Binance did not have protocols in place to flag or report transactions with money laundering risks, and employees were well aware that such monitoring would invite criminals onto the platform. According to court documents, a member of Binance’s compliance staff wrote: “We need a banner ‘it’s too hard to wash drug money these days – come to Binance, we have to cake for you. »

Zhao’s sentencing comes just over a month after his former rival, Sam Bankman-Fried, was sentenced to 25 years in federal prison for his role in a year-long, multibillion-dollar fraud through FTX , which was the second largest cryptocurrency exchange before its sudden. collapse in fall 2022.

The back-to-back convictions underscore the tougher line the Justice Department is taking against financial crimes in general and crypto in particular.

Crypto investors and companies have been keen to shake the sector’s reputation as a financial system for criminals and move into the mainstream.

But crypto skeptics tend to view the entire $2 trillion industry with suspicion and say the DOJ hasn’t done enough to combat it.

“Crime pays is the message sent today” by the Justice Department, Dennis Kelleher, CEO of the nonprofit Better Markets, said Tuesday. “He didn’t even accuse CZ of money laundering; it was only accused of not having an anti-money laundering program. It’s less than a slap on the wrist.