The former CEO of Binance and once a dominant figure in the cryptocurrency industry, Changpeng Zhao, was given a four-month prison sentence yesterday after admitting to violating anti-money laundering laws in the United States. The sentencing of Changpeng, commonly known as CZ, marks a landmark moment in the crypto industry, with two major figures now having been imprisoned.
The sentence, handed down by US District Judge Richard Jones in Seattle, is considerably less than the three years sought by the prosecution and below the 18 month maximum suggested by federal guidelines. Notably, it pales in comparison to the 25 year sentence handed to Sam Bankman-Fried in March for stealing US$8 billion from clients of his now-defunct FTX exchange.
The sentencing of Changpeng concludes a prolonged investigation into Binance and its billionaire former CEO who resided outside of US jurisdiction in the United Arab Emirates. This was an epic day, stated US Attorney Tessa Gorman, expressing satisfaction with the outcome.
Judge Jones pointed out Changpeng’s prioritisation of Binance’s growth and profitability over adherence to US regulations before delivering the sentence.
“You had the wherewithal, the finance capabilities, and the people power to make sure that every single regulation had to be complied with, and so you failed at that opportunity.”
Wild West operation
Prosecutors painted a picture of Binance as a Wild West operation that turned a blind eye to criminal activity. Over 100,000 suspicious transactions with designated terrorist groups were not reported.
Changpeng’s exchange was also accused of facilitating the sale of child sexual abuse materials and receiving a significant portion of the ransomware proceeds.
As part of the judgment, Binance agreed to pay a US$4.32 billion penalty, and Changpeng was ordered to pay a US$50 million criminal fine and an additional US$50 million to the US Commodity Futures Trading Commission.
Changpeng apologised to the judge before sentencing.
“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. I realise now the seriousness of that mistake.
Changpeng’s legal representation had asked for probation, arguing other individuals admitting to similar wrongdoing, including BitMEX founder Arthur Hayes, were not incarcerated.
The 47 year old Changpeng showed no visible reaction to his sentence. He will voluntarily surrender to serve his sentence, likely at a detention centre near Seattle-Tacoma International Airport.
The sentencing of Changpeng sends a clear warning to the crypto industry as US authorities continue to target fraudulent and illegal activities. The collapse of cryptocurrency prices in 2022 has exposed misconduct throughout the sector, placing other crypto moguls in the crosshairs of US law enforcement, reported Bangkok Post.
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