A federal judge sentenced former Binance CEO Changpeng “CZ” Zhao to four months in prison for violating U.S. money laundering laws. The sentencing occurred during an April 30 hearing in the U.S. District Court for the Western District of Washington.
Judge Richard Jones handed down the sentence, citing the lack of evidence indicating Zhao had specific knowledge of illegal activities at Binance. This decision came after Zhao pleaded guilty to failing to maintain an effective Anti-Money Laundering (AML) program while at Binance. Although prosecutors recommended a three-year sentence, CZ's lawyers requested probation.
In his statement, Judge Jones acknowledged Zhao's lack of direct involvement in specific illegal acts at Binance, pushing back against the government's request to enhance the sentence to three years. Despite this, the judge noted that incarceration was needed to reflect the severity of the crime. Kevin Mosley, representing the prosecution, argued that a lighter sentence could incentivize others to violate the law on a larger scale.
Zhao's legal team suggested that documents presented to the court, but sealed from the public, should play a "compelling factor" in sentencing. They proposed probation for fewer than six months, noting that Zhao's wealth could make him a target in prison. The judge ultimately decided on a four-month sentence, balancing these considerations with the need to maintain the integrity of U.S. money laundering laws.
Before his sentencing, Changpeng "CZ" Zhao apologized for his actions and acknowledged his responsibility for Binance's failure to implement an effective Anti-Money Laundering (AML) program. He mentioned that he had a lot of time to reflect on his actions.
The sentencing hearing had been rescheduled from February, occurring after the sentencing of former FTX CEO Sam Bankman-Fried, who was convicted of seven felony charges in November. Bankman-Fried received a 25-year prison sentence, although his legal team has filed a notice of appeal against both the conviction and the sentence.
CZ's hearing was considered less high-profile than Bankman-Fried's trial or sentencing, which drew large crowds outside the New York City courthouse. Attorneys from the Justice Department noted that comparisons between the two cases weren't appropriate, emphasizing that the focus should be on the crimes committed, not the personalities involved.
Zhao resigned as CEO of Binance and pleaded guilty to a felony as part of a settlement with U.S. authorities, under which the crypto exchange agreed to pay $4.3 billion for "civil regulatory enforcement actions." However, the settlement did not impact an ongoing civil lawsuit filed by the U.S. Securities and Exchange Commission in June 2023 against Binance, Binance.US, and CZ.
Following his resignation, CZ stated he planned to "stay off Twitter" and has refrained from publicly commenting on his criminal case. In March, he launched Giggle Academy, an educational initiative focused on crypto and blockchain for young people. Richard Teng, the former head of regional markets for Binance, became CEO following Zhao's departure.
Another significant figure in the crypto space, Alex Mashinsky, former CEO of Celsius, is set to face charges in the United States, with his criminal trial scheduled to begin in January 2025.
