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Changpeng Zhao, the founder and ex-CEO of crypto exchange giant Binance, has been sentenced to four months in prison after pleading guilty to charges in a Seattle federal court that the trading platform violated US anti-money laundering requirements.
That's a much shorter sentence than the US Department of Justice had recommended earlier this month. The DOJ had said Zhao, also known as "CZ,'" should serve three years in prison and pay a $50 million fine for enabling money laundering on the exchange. The crypto kingpin's attorneys had suggested he instead only be sentenced to probation, arguing, "No defendant in a remotely similar [Bank Secrecy Act] case has ever been sentenced to incarceration."
After pleading guilty, Zhao, once one of the wealthiest people in crypto, was directed to step down from the helm of Binance last November. Under his leadership, the former CEO had expanded the company into one of the world's biggest crypto exchanges. Prosecutors claim the company's growth was partly due to the firm facilitating financial transactions between US users and users in Iran and other US-sanctioned countries which the US government says pose a threat to national security.
"Zhao's strategy worked: Binance — operating on a Wild West model that, as one compliance employee said, told criminals "come to binance we got cake for you" — quickly became the colossus of crypto exchanges," prosecutors had written in Zhao's sentencing memo. "As a result, Zhao is one of richest people in the world and a celebrity in the crypto industry."
Binance will also pay a $4.3 billion fine in federal court, part of which will go toward settling a lawsuit the Commodity Futures and Trading Commission launched against the exchange in March 2023. The CFTC lawsuit accused the ex-CEO and his company of "failing to stop illegal trading activity" on the platform.
The charges came around the time when FTX, a rival to Binance, collapsed over allegations in November 2022 that the exchange's owners had misused customer funds. Sam Bankman-Fried, the CEO of the exchange, was eventually sentenced to 25 years in prison after he was found guilty of multiple fraud charges.
Binance and the US Department of Justice didn't immediately respond to a request for comment from Business Insider before publication.
