Former Binance CEO Changpeng Zhao sentenced to four months imprisonment

The world’s largest cryptocurrency exchange’s former CEO, Changpeng Zhao, admitted guilt to breaking US anti-money laundering rules and was sentenced to four months in prison on Tuesday.

United States District Judge Richard Jones of Seattle handed down the sentence after turning down the prosecution’s plea for 47-year-old Zhao to serve a three-year term.

Zhao, often known as “CZ,” was formerly regarded as the most influential person in the bitcoin sector. He is the second prominent cryptocurrency CEO to receive a prison sentence.

Zhao resigned after Binance agreed to pay $4.3 billion to settle related claims after entering a guilty plea to one count of neglecting to adopt necessary anti-money-laundering measures in November. US officials said Zhao deliberately looked the other way as people conducted transactions that supported child sex abuse, the illegal drug trade and “terrorism”.

“I failed here,” Zhao said before US District Judge Richard A Jones issued the sentence. “I deeply regret my failure, and I am sorry.”

Prosecutors requested a three-year prison sentence, which was more than double the recommended penalty for the offense. They contended that no one would enforce the law if he was not sentenced to time in jail for the offense. More than 1.5 million virtual currency exchanges worth around $900 million that broke US sanctions were approved by Binance, including transactions involving Iran, al-Qaeda, and the Qassam Brigades of Hamas.

The United States Department of Justice stated in a sentencing memorandum submitted last week that “he made a business decision that violating US law was the best way to attract users, build his company, and line his pockets.”

Despite the UAE’s lack of an extradition treaty with the US, Zhao’s lawyers argued that he should not face any prison time at all, pointing to his readiness to travel from the United Arab Emirates, where he and his family reside, to the US to enter a guilty plea.

Before stepping down, Zhao started making modifications to make Binance a model of compliance with financial transparency requirements. Defense attorneys Mark Bartlett and William Burck informed the judge that no one had ever been sentenced to prison time for identical violations of the Bank Secrecy Act.

“There is no excuse for my failure to establish the necessary compliance controls at Binance,” Zhao wrote in a letter to the court. “I wish I could change that part of Binance’s story. But under my direction, Binance has now implemented the most stringent anti-money laundering controls of any non-U.S. exchange, and those controls have been in place since 2022.”