Binance founder Changpeng Zhao receives four-month prison sentence
Changpeng Zhao, the founder of Binance, has been sentenced to four months in prison for failing to implement adequate anti-money laundering measures. The Chinese-Canadian business magnate admitted to these charges in November 2023. Judge Richard Jones highlighted that Zhao prioritized the growth and profits of Binance over compliance with US laws and regulations. Despite not expecting any repeat offenses from Zhao, Judge Jones emphasized the seriousness of his crime.
Zhao's Binance: A controversial cryptocurrency exchange
Zhao launched Binance in 2017 and remains its dominant shareholder, even after stepping down as CEO as part of his plea deal. The company has been labeled "a massive shitcoin casino" due to its listing of a significantly larger number of tokens compared to rivals like Coinbase. Prosecutors had initially sought a three-year prison term for Zhao, citing the scope and ramifications of his misconduct.
Prosecution alleges Binance facilitated sanctions violations
The prosecution argued that Binance facilitated sanctions violations amounting to over $898 million and "violated US law on an unprecedented scale." They alleged that Zhao and other top executives at Binance disregarded US laws such as the Bank Secrecy Act (BSA) and failed to adequately enforce anti-money laundering initiatives. This negligence allowed customers from sanctioned nations like Iran, Cuba, and Syria to conduct transactions with US customers in violation of sanctions.
Zhao's defense argues against incarceration
In response to the allegations, Zhao's legal team argued that he should not serve any jail time as "no defendant in a remotely similar BSA case has ever been sentenced to incarceration." They highlighted that Zhao had traveled from his residence in the UAE to enter his guilty plea and had been separated from his family for over five months. They also noted that Binance has taken steps to amend their anti-money laundering protocols.
Zhao agrees to pay $50 million fine
Zhao has agreed to pay a $50 million fine and will not contest any sentence up to 18 months. This penalty is a small fraction of the estimated $33 billion fortune he amassed with Binance. In October 2022, following a story in CoinDesk, Zhao publicly declared his intention to sell his holdings of FTX's token, which led to a rush on FTX and eventually uncovered fraud at the exchange.
