Binance founder sentenced to 4 months in prison on money laundering charges

Binance founder sentenced to 4 months in prison on money laundering charges

Changpeng Zhao, the founder of the world’s leading cryptocurrency exchange, was sentenced to four months in prison on Tuesday after pleading guilty to money laundering charges last year.

The sentence, handed down in US federal court in Seattle, was far lighter than the three years prosecutors had argued for.

Before Tuesday’s sentencing hearing, Zhao, who is serving CZ, apologized for the mistakes he made as CEO of Binance, the crypto exchange he founded in 2017.

“Words cannot explain how much I regret my choice that caused me to be in front of the Court,” he said in a letter to the judge. “Be assured that it will never happen again.”

Binance agreed to pay more than $4 billion in fines and other penalties as part of a settlement reached with the federal government last fall. The company admitted to being involved in the prevention of money laundering, unlicensed money transmission and sanctions violations.

Zhao, who is 47 years old and has a personal fortune of nearly $40 billion, according to Bloomberg, agreed to step down as CEO and pay a $200 million fine.

Following a years-long investigation, US authorities in November said Binance — the world’s largest crypto exchange — allowed bad actors on the platform, enabling transactions linked to child sex abuse, narcotics and terrorist financing.

Further, Binance has no protocol for flagging or reporting transactions for money laundering risk, and employees are well aware that such oversight will invite criminals to the platform. According to court documents, a Binance compliance staffer wrote: “We need a banner ‘drug money laundering is too hard today – come to binance we have cake for you.'”

Zhao’s sentence comes more than a month after his former rival, Sam Bankman-Fried, was sentenced to 25 years in federal prison for his role in a multibillion-dollar fraud over FTX, which was the second-largest crypto exchange before the outage. collapse in autumn 2022.

The back-to-back sentences underscore the tough line the Justice Department has taken against financial crime broadly and crypto in particular.

Crypto investors and businesses have been keen to shake the industry’s reputation as a financial system for criminals and move into the mainstream.

But crypto skeptics tend to view the entire $2 trillion industry with suspicion and say the DOJ isn’t doing nearly enough to combat it.

“‘Crime pays’ is the message being sent today” by the Justice Department, Dennis Kelleher, CEO of the nonprofit Better Markets, said in a statement Tuesday. “It does not even charge CZ with money laundering; he was only charged for not having an anti-money laundering program. That’s less than a slap on the wrist.”

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