The founder of Binance, Changpeng Zhao, has been sentenced to four months in a U.S. prison.
This verdict came after Zhao pleaded guilty to charges related to money laundering, marking one of the most high-profile cases in the crypto world since the incarceration of Sam Bankman-Fried.
Acknowledging Zhao’s acknowledgment of his misdeeds, U.S. District Judge Richard A. Jones credited the former CEO of Binance for taking responsibility for his actions.
Zhao, a Canadian national aged 47, had admitted guilt to one count of failing to maintain an anti-money-laundering program back in November. This confession led to Binance agreeing to a staggering $4.3 billion settlement with the U.S. government, thereby resolving related allegations.
During the court proceedings, Zhao expressed remorse, stating, “I failed here. I deeply regret my failure, and I am sorry.” Despite this display of contrition, Judge Jones voiced concern over Zhao’s decision to disregard U.S. banking regulations, a move that fueled Binance’s meteoric growth trajectory.
Prosecutors revealed that Zhao had instructed his employees to adopt a stance of “Better to ask for forgiveness than permission” regarding the company’s approach to U.S. law.
Following the legal fallout, Changpeng Zhao relinquished his position as the head of the world’s largest cryptocurrency exchange platform towards the end of the previous year, as part of a negotiated settlement with U.S. authorities.
Investigations conducted by two Treasury agencies had unearthed Binance’s failure to prevent transactions linked to entities such as the Islamic State group, al-Qaeda, or the armed wing of Hamas.
With Zhao admitting guilt to violating U.S. anti-money laundering laws and Binance agreeing to the hefty settlement in February, prosecutors sought a three-year prison sentence, a departure from the typical probation that such crimes attract.
The U.S. Department of Justice described Zhao’s actions as a strategic business decision to flout U.S. laws, viewing it as a means to bolster user acquisition, company growth, and personal wealth.
The sentencing memorandum emphasized that the verdict would not only serve as a message to Zhao but also resonate across the global financial landscape.
Notably, the downfall of Binance’s primary rival exchange, FTX, in November 2022, coupled with criminal charges against industry executives, further exacerbated the industry’s woes. This period of upheaval saw investors withdraw funds from crypto assets, causing widespread concern.
Despite the setbacks, the crypto industry staged a recovery in recent months, partly attributable to U.S. regulators greenlighting exchange-traded funds in bitcoin. These financial instruments allowed investors to engage with cryptocurrencies without needing to directly open a crypto account.
In light of these developments, Binance’s new CEO, Richard Teng, emphasized the company’s commitment to compliance, stating that they had invested significantly in this area and were closely cooperating with regulators, as reported by AFP.
