Changpeng Zhao, the billionaire founder of the prominent cryptocurrency exchange Binance, received a four-month prison sentence on Tuesday, April 30, 2024, following his guilty plea to money laundering violations last year.
This term, significantly shorter than the three years demanded by prosecutors, came after a dramatic legal battle.
Prosecutors had sought a lengthier sentence, while Zhao’s defense had argued for probation, aiming to avoid any prison time altogether.
Zhao’s sentencing marks another significant development in the US Justice Department’s efforts to combat illicit activities within the cryptocurrency industry.
In March, Sam Bankman-Fried, founder of the now-defunct FTX exchange and a former rival of Zhao’s, was handed a 25-year sentence for fraud.
Not long ago, Zhao and Bankman-Fried stood at the forefront of the multi-trillion-dollar crypto industry.
Binance, under Zhao’s leadership, dominated the sector, processing up to two-thirds of all transactions. However, the company faced intense scrutiny from US authorities over allegations of legal violations in building its empire.
Amid mounting legal pressure, Zhao, known as CZ, often downplayed concerns about Binance, dismissing them as “FUD” (fear, uncertainty, and doubt) — a term common in the crypto world for false rumors intended to harm a business.
The legal saga intensified in November 2022 when Zhao played a role in bringing down Bankman-Fried’s FTX through a series of social media posts, triggering a run on FTX accounts. Bankman-Fried was subsequently arrested on fraud charges.
The tables turned a year later when Zhao found himself facing criminal prosecution.
In November, Binance agreed to a $4.3 billion settlement with several US agencies, including the Justice Department, over allegations of enabling terrorist organizations like Hamas, the Islamic State, and Al Qaeda to use its platform.
Prosecutors alleged that under Zhao’s watch, Binance had flouted American sanctions, allowing access to customers in countries like Iran, Syria, and Cuba.
Additionally, the company failed to report suspicious transactions involving narcotics and child sexual abuse materials, according to the government.
Zhao admitted to a single criminal count, conceding that he had failed to establish an adequate anti-money-laundering system at Binance. He resigned as CEO and agreed to a $50 million fine.
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