Changpeng Zhao, formerly Binance’s CEO, received a four-month prison sentence on Tuesday for violating U.S. anti-money laundering laws. Known as “CZ,” Zhao once held significant influence in the cryptocurrency world and is now the second top crypto executive to face imprisonment. US District Judge Richard Jones in Seattle issued a sentence far less than the three-year term prosecutors had sought, and well below the maximum 1.5 years federal guidelines recommend.
The sentence contrasted sharply with the 25-year term given to Sam Bankman-Fried in March for stealing $8 billion from customers of his bankrupt FTX exchange. Bankman-Fried is appealing his conviction and sentence. The sentencing marked the culmination of a prolonged investigation into Zhao and Binance by U.S. authorities, said U.S. Attorney Tessa Gorman in Seattle.
Before delivering the sentence, Judge Jones criticized Zhao for prioritizing Binance’s growth over compliance with U.S. regulations. “You had the resources and personnel necessary to comply fully with regulations, yet you failed,” Jones stated. Zhao, 47, maintained his composure as the sentence was announced, dressed in a navy blue suit with his family present; his defense had argued for probation.
Critics, like Dennis Kelleher from the financial reform advocacy group Better Markets, argued the sentence was too lenient, implying Zhao benefits despite his wrongdoing. The prosecution depicted Binance as a platform that ignored the law, failed to report over 100,000 suspicious transactions, and facilitated transactions with known terrorist groups and illegal material sales.
Additionally, Binance was fined $4.32 billion, and Zhao personally paid $100 million in penalties to U.S. authorities.
