The founder and former chief executive of Binance, Changpeng Zhao (also known as “CZ”), will serve a four-month prison term after pleading guilty to violating US money-laundering laws on Tuesday (April 30), Reuters reported.
This is shorter than the three-year period US prosecutors had proposed in April, who said that a tough sentence for the man once considered the most powerful person in the crypto industry would send a message that “the right choice, every time, is to comply with the law.”
Binance was accused of not reporting more than 100,000 suspicious transactions involving designated terrorist groups including Hamas, al-Qaeda, and Islamic State. The prosecutors also claimed that the cryptocurrency exchange supported the sale of child sexual abuse materials and received a large portion of ransomware proceeds.
“I’m sorry,” CZ told US District Judge Richard Jones before his sentencing in Seattle. “I believe the first step of taking responsibility is to fully recognise the mistakes. Here I failed to implement an adequate anti-money laundering program.”
The court has also imposed a US$4.32 billion penalty on Binance. Apart from serving his prison sentence, CZ is expected to pay a US$50 million criminal fine and another US$50 million to the U.S. Commodity Futures Trading Commission.
Zhao stepped down as Binance’s chief in November, when he and the exchange he founded in 2017 admitted to evading money-laundering requirements under the Bank Secrecy Act. US officials, in November, asserted that Binance and CZ’s “wilful violations” of its laws had threatened the US financial system and national security.
“Binance turned a blind eye to its legal obligations in the pursuit of profit,” said Treasury Secretary Janet Yellen. “Its wilful failures allowed money to flow to terrorists, cybercriminals, and child abusers through its platform.”
CZ’s sentencing comes shortly after Sam Bankman-Fried was sentenced to 25 years in prison for committing fraud through crypto platform FTX. Widely known as the “crypto king”, Bankman-Fried was found to have stolen billions from customers ahead of the firm’s failure.
Featured Image Credit: Benoit Tessier | Reuters
