On Tuesday, the court sentenced Changpeng Zhao, founder of Binance, to four months in prison after he pleaded guilty to charges of allowing money laundering on Binance.
“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,” said United States District Judge Richard Jones to Zhao in a Seattle federal court.
The sentence, however, was significantly less than what federal prosecutors were aiming for, which is three years. The defense asked for five months of probation, although the sentencing guidelines called for a 12 to 18 months prison term.
During the trial, Zhao showed remorse for his negligence, owning up to his mistakes of not implementing an adequate anti-money laundering program.
Back in November, Zhao struck a deal with the United States government to resolve a multiyear-long investigation into Binance, which led to the founder’s surrender of his role as the CEO. But according to stats, Zhao owns an estimated 90% stake in the crypto exchange.
In addition, authorities ordered Binance to pay $4.3 billion in fines and forfeiture, and Zhao agreed to pay $50 million.
The Commodity Futures Trading Commission and the U.S. Securities and Exchange Commission have sued Binance separately over the alleged mishandling of customer assets. In addition, the crypto exchange was also illegally operating as an unregistered exchange in the United States.
“Binance is proud of the culture of compliance, security, and transparency we have created over the years, and we look forward to building on that culture as we continue to evolve,” said a Binance spokesperson.
According to the prosecutors, they let Zhao off easy, unlike his former crypto rival Sam Bankman-Fried of FTX, who received a 25-year sentence for fraud and misuse of customer’s funds. However, the Binance founder’s case focuses on regulatory and compliance failure.
Some state that under Zhao’s leadership, the crypto exchange was operating like the “Wild West,” violating U.S. laws deliberately on an unprecedented scale. Although compliance failure is a serious offense, it might be perceived as an oversight failure rather than intentional misconduct.
