Former CEO of Binance Changpeng Zhao, founder of the world’s largest crypto exchange, was sentenced to four months in prison on April 30. In November 2023, Zhao, also known as “CZ,” stepped down as CEO and pled guilty for breaking U.S. anti-money laundering laws as part of a $4.3 billion settlement to resolve a years old probe into the crypto exchange.
“I deeply regret my behavior and I’m sorry,” Zhao said to the judge with his family in attendance at the hearing. “I fully recognize the seriousness of the mistakes I made.”
Binance broke U.S. anti-money laundering laws when Zhao allowed U.S adversaries, terrorist groups and cybercriminals to use the crypto firm to launder money. The firm had more than 100,000 suspicious charges on its exchange, according to authorities.
Zhao was required to pay $50 million personally, while Binance is paying $1.81 billion in the first 15 months and another $2.5 billion as part of the deal after the November settlement.
Prison is no stranger to crypto exchange founders as FTX founder Sam Bankman-Fried, also known as “SBF,” was sentenced to 25 years for securities and fraud conspiracies that eventually lead to the bankruptcy of his crypto hedge fund. Bankman-Fried was fined $11 billion for using the money from investors for his own personal use, to make investments and to make donations to political parties, both Democrats and Republicans.
At his peak, SBF was worth $26.5 billion. According to Forbes, he was a billionaire because he had his money tied up in ownership of about half of FTX and a share of the exchange’s FTT tokens.
Most of Bankman-Fried’s assets were tied to his firm and to FTT tokens, which are a deflationary cryptocurrency. This caused his fortune to go from billions to zero, while CZ’s net worth will probably stay the same or even grow while in prison.
Getting a guilty plea from the CEO of a company is rare, and Zhao going to prison calls attention to the U.S. Department of Justice’s push to get charges against executives.
Zhao is still the majority shareholder of Binance even though he stepped down. Binance is still a thriving company and Zhao might be able to run operations and influence the company while in prison.
It exemplifies the government’s attempts to take control of the crypto industry and stop cyber and financial crimes from happening to save investors from getting taken advantage of.
