Binance’s CZ sentenced to four months in prison

Changpeng Zhao, the former CEO of Binance, has been sentenced to four months in prison in Seattle after pleading guilty to money laundering charges. The sentencing took place on Tuesday, during which Zhao expressed remorse and took responsibility for his actions.

Zhao apologized for his “mistakes” and highlighted Binance’s implementation of Know Your Customer and anti-money laundering programs, stating that the exchange is now cooperating with the government. Despite prosecutors seeking a much longer sentence of 36 months, Judge Richard Jones disagreed, opting for a shorter prison term.

Prosecutors accused Zhao of deliberately targeting U.S. users and violating U.S. laws for the benefit of his company. They argued that Zhao’s actions were not accidental but rather a deliberate strategy to attract users and grow Binance’s business.

In contrast, Zhao’s lawyers described him as a first-time offender whose life revolves around his family and the positive impact of technology, including his work with Binance.

Zhao’s lawyer, William Burck, also highlighted the risks Zhao faces in prison due to his notoriety, wealth, and cooperation with the government.

Zhao had previously pleaded guilty in November to failing to implement an effective anti-money laundering program and agreed to pay a $50 million fine. Binance itself agreed to a massive $4.3 billion settlement. Following his guilty plea, Zhao stepped down as CEO and was succeeded by Richard Teng.

Binance continues to face legal challenges, including a lawsuit filed by the U.S. Securities and Exchange Commission (SEC). The SEC accused Binance and Zhao of various violations, including misleading customers, failing to restrict U.S. investors, and operating as an unregistered exchange.

In his letter, Zhao admitted that he should have put better compliance measures in place at Binance, stating, “There is no excuse for my failure,” and assured this would be his only “encounter with the criminal justice system.” He also shared plans to support biotech startups and youth initiatives moving forward.

Zhao’s request for leniency is supported by 161 letters, including from family, friends, and colleagues. His sister, Jessica Zhao, highlighted his commitment to doing good, even during the FTX crisis, ensuring Binance safeguarded customer funds.

Further support came from He Yi, Binance co-founder and mother of Zhao’s three children, who defended Zhao’s navigation of the complex and under-regulated cryptocurrency landscape. Zhao’s wife, Yang Weiqing, mentioned that he’s given millions to help disaster victims in Japan. Plus, Zhao’s kids and Tigran Gambaryan, who heads Financial Crime Compliance at Binance, shared some personal stories and praised “his integrity and global impact.”

Additional letters of support came from notable figures such as Binance’s Head of Financial Crime Compliance, Tigran Gambaryan, former U.S. Ambassador to China, Max S. Baucus, and academics from prominent universities, all attesting to Zhao’s integrity and impact.

DoJ argued that Zhao’s leadership at Binance involved a “Wild West” approach, ignoring U.S. anti-money-laundering regulations, which enriched him and elevated his status in the cryptocurrency world. The harsher sentence is seen as a measure to deter similar violations by others in the industry.