Binance Founder Changpeng Zhao Receives 4-Month Prison Sentence for Money Laundering Violations

Former Binance CEO Changpeng "CZ" Zhao has been sentenced to four months in prison after pleading guilty to money laundering violations last year.

Zhao, who founded Binance in 2017, played a pivotal role in establishing the exchange as the largest in the cryptocurrency industry by trading volume. However, he stepped down from his position as CEO last November as part of a $4.3 billion settlement with U.S. law officials.

According to U.S. Justice Department officials, Zhao fostered a company culture at Binance where growth took precedence over compliance with U.S. financial regulations. This allowed funds associated with virtual theft and terrorism to flow through Binance without detection.

As part of the settlement, Binance agreed to withdraw from the U.S. market entirely. Additionally, Zhao personally agreed to pay a $50 million fine and refrain from involvement in Binance operations for at least three years due to his guilty plea for anti-money laundering violations.

Zhao has been restricted from leaving the U.S. since entering his guilty plea, with federal prosecutors citing concerns about his potential flight given his estimated wealth of $37 billion.

Despite the U.S. Department of Justice recommending a three-year prison sentence for Zhao, citing his "willful violation of U.S. law," the judge ultimately handed down a four-month term. Zhao's lawyers had argued for probation instead of incarceration, noting that similar cases had not resulted in prison sentences.

Meanwhile, Binance is facing an ongoing lawsuit from the Securities and Exchange Commission (SEC) alleging violations of securities laws in the U.S. The firm has moved to have the charges dismissed, contesting the SEC's allegations.