Binance founder Changpeng Zhao has been sentenced to four months in prison

A federal judge sentenced Binance founder Changpeng Zhao (commonly known as “CZ”) to four months in prison, the first reported by New York Times. Prosecutors recommended three years. Zhao pleaded guilty in November to violating the Bank Secrecy Act by failing to establish an anti-money laundering program.

The Justice Department accused Zhao of allowing criminal activity to flourish on the crypto exchange. “Binance turned a blind eye to its legal obligations in pursuit of profit. His willful failures have allowed money to flow to terrorists, cybercriminals and child abusers through his platform,” Treasury Secretary Janet Yellen said in November.

The government accused Binance of refusing to comply with US sanctions and failing to report suspicious drug transactions and child sexual abuse material. Prosecutors said in court that Zhao told Binance employees it was “better to ask for forgiveness than permission,” while boasting that if Binance had followed the law, it wouldn’t be “as big as we are today.” .

Under the terms of the settlement, Binance agreed to forfeit $2.5 billion and pay a fine of $1.8 billion. Zhao personally paid $50 million as part of the settlement.

Although the charges differ, Zhao’s sentence is dramatically shorter than the 25 years fellow crypto figure Sam Bankman-Fried received in March. SBF, as it is commonly known, was convicted on seven counts of fraud and conspiracy for its role at the helm of crypto platform FTX.

Zhao played an integral role in the fall of Bankman-Fried — and the broader decline of the crypto industry over the past 18 months. Binance’s founder tweeted in November 2022 that his company would liquidate its holdings in the FTX de facto token. He said “the latest revelations that have come[sic] of light’, while citing ‘ethical considerations’ and ‘regulatory risks’. The posts not only crushed FTX, but the crypto world as a whole. (They probably helped get the government’s attention, too.) When FTX’s wells dried up after the rig’s rapid collapse, Zhao briefly agreed to buy the company, but quickly backed out.

Prosecutors said Zhao’s crime carries a standard federal sentence of 12 to 18 months, but argued for three years in prison, describing his crimes as “on an unprecedented scale.” But Judge Richard A. Jones saw it differently, sentencing him to a paltry one-twelfth of the government’s proposed term.

“This was not a mistake — it was not a regulatory oops,” Kevin Moseley, a DOJ attorney, said in court Tuesday. “Breaking American laws is not incidental to his plan to make as much money as possible. Breaking the law was an integral part of this endeavor.