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Binance founder Changpeng Zhao gets four-month prison sentence

Binance founder Changpeng Zhao

Changpeng Zhao, the founder of Binance, has been sentenced to four months in prison by a federal judge, as reported by The New York Times. Prosecutors initially recommended a three-year sentence. Zhao pleaded guilty in November for violating the Bank Secrecy Act by failing to establish an anti-money laundering program.

The Department of Justice (DOJ) accused Zhao of allowing criminal activities to thrive on Binance. Treasury Secretary Janet Yellen stated, “Binance ignored its legal responsibilities in pursuit of profit. Its deliberate failures facilitated money flow to terrorists, cybercriminals, and individuals involved in child abuse through its platform.”

The government alleged that Binance defied American sanctions and neglected to report suspicious transactions related to drugs and child exploitation materials. In court, prosecutors mentioned that Zhao advised Binance employees to prioritize seeking forgiveness over permission. Zhao also boasted that Binance wouldn’t have grown as significantly if it had followed the law.

As part of the plea deal, Binance agreed to forfeit $2.5 billion and pay a $1.8 billion fine. Zhao personally paid $50 million as part of the settlement.

Despite differences in charges, Zhao’s sentence is considerably shorter than the 25-year sentence received by fellow crypto figure Sam Bankman-Fried in March. Bankman-Fried faced seven counts of fraud and conspiracy related to his role at FTX, a crypto platform.

Zhao’s actions played a pivotal role in Bankman-Fried’s downfall and contributed to a decline in the crypto industry over the past 18 months. Zhao announced in November 2022 that Binance would liquidate its holdings in FTX’s token due to ethical and regulatory concerns. This decision had a significant impact on FTX and the broader crypto community, possibly attracting government attention. Although Zhao briefly considered buying FTX after its collapse, he ultimately withdrew from the deal.

Prosecutors sought a three-year term for Zhao, highlighting the unprecedented scale of his crimes. However, Judge Richard A. Jones imposed a much shorter sentence, indicating a different perspective from the government’s recommendations.

Kevin Mosley, a DOJ lawyer, emphasized in court that Zhao’s actions were not accidental but integral to his pursuit of maximizing profits, stating, “Breaking U.S. law was not incidental to his plan to make as much money as possible. Violating the law was integral to that endeavor.”