Former Binance CEO Changpeng “CZ” Zhao has been sentenced to four months in prison for violating U.S. money laundering laws. The sentencing took place on April 30 in the U.S. District Court for the Western District of Washington, where Judge Richard Jones delivered the verdict. Prosecutors had recommended a three-year sentence for Zhao’s failure to maintain an effective Anti-Money Laundering (AML) program while at Binance, to which he pleaded guilty in November. However, CZ’s lawyers requested probation instead.
During the hearing, Judge Jones stated that there was no evidence suggesting that Zhao was aware of any specific illegal activities at Binance, rejecting the prosecutors’ request to increase the sentence from 18 months to three years. The government’s attorneys argued that CZ had a tendency to seek forgiveness rather than permission at Binance, and should not be allowed to profit from his actions.
The prosecution’s representative, Kevin Mosley, emphasized the need for incarceration to reflect the seriousness of the offense. He also warned that a probationary sentence would encourage others to break the law on a large scale. Zhao’s defense team referred to sealed documents presented to the court as a compelling factor for the judge to consider during sentencing. They argued that probation for less than six months would be appropriate, citing concerns about Zhao’s safety due to his wealth.
Before being sentenced, CZ expressed remorse for his actions and acknowledged his responsibility for Binance’s failure to implement an effective AML program. Following Judge Jones’ decision, Zhao confirmed that he would report to prison at a later date determined by the court.
The hearing, originally scheduled for February, was delayed to follow the sentencing of former FTX CEO Sam Bankman-Fried, who was found guilty of seven felony charges in November. Bankman-Fried was sentenced to 25 years in prison, but his lawyers have filed an appeal against both the conviction and the sentence.
Although CZ’s hearing did not attract the same level of attention as Bankman-Fried’s trial and sentencing, attendees noted that the crimes committed by the two individuals should not be compared based on their personalities, according to the attorneys for the Justice Department.
Changpeng Zhao resigned as Binance CEO and pleaded guilty to the felony charge as part of a settlement with U.S. authorities. Binance agreed to pay $4.3 billion for civil regulatory enforcement actions, which did not affect the ongoing civil suit filed by the U.S. Securities and Exchange Commission against Binance, Binance.US, and CZ in June 2023.
Following his resignation, CZ stated that he intended to stay away from Twitter and has not publicly commented on the criminal case. In March, he launched Giggle Academy, an educational project focused on crypto and blockchain for young people. Richard Teng, Binance’s former head of regional markets, assumed the role of CEO after Zhao’s departure.
Alex Mashinsky, the former CEO of Celsius, is expected to be one of the next prominent figures in the crypto industry to face charges, following Bankman-Fried and Zhao. Mashinsky’s criminal trial in the United States is scheduled to commence in January 2025.
According to Inner City Press and X Hall of Flame, Mashinsky’s case is anticipated to be less high-profile than Bankman-Fried’s and may result in a shorter prison sentence.