Changpeng Zhao, the founder of Binance, the world's leading cryptocurrency exchange, has been sentenced to four months in prison after pleading guilty to money-laundering charges. The sentence was handed down in a US federal court in Seattle, which is lighter than the three years prosecutors had sought.
Prior to the sentencing, Zhao, also known as CZ, apologized for his mistakes as the CEO of Binance, which he founded in 2017. He expressed deep regret for his actions and assured that such incidents would not occur again.
Binance, as part of a coordinated settlement with the federal government, agreed to pay over $4 billion in fines and penalties. The company admitted to engaging in anti-money laundering activities, unlicensed money transmitting, and sanctions violations. Zhao, with a personal fortune of nearly $40 billion, agreed to step down as CEO and pay $200 million in fines.
US authorities, after a multiyear investigation, found that Binance allowed illicit activities on its platform, including transactions related to child sex abuse, narcotics, and terrorist financing. The company lacked protocols to flag or report money-laundering risks, leading to criminal activities on the platform.
Following Zhao's sentencing, his former rival, Sam Bankman-Fried, was sentenced to 25 years in federal prison for his involvement in a multibillion-dollar fraud through FTX, the second-largest crypto exchange before its collapse in 2022. These back-to-back sentences highlight the Department of Justice's stricter stance against financial crimes, especially in the crypto industry.
Crypto investors and businesses aim to improve the industry's reputation and move towards mainstream acceptance. However, skeptics remain wary of the $2 trillion industry, criticizing the DOJ for not doing enough to combat illicit activities. The sentencing of Zhao has sparked debates about the effectiveness of the justice system in addressing financial crimes in the crypto space.
