Binance founder Changpeng Zhao sentenced to 4 months in prison

Binance founder Changpeng Zhao, once one of the most powerful figures in the cryptocurrency world, has been sentenced to prison. Previously, FTX founder Sam Bankman-Fried was sentenced to 25 years in prison.

About the trial

Zhao resigned as head of Binance in November 2023 after he and his company admitted to failing to comply with anti-money laundering requirements under the Bank Secrecy Act.

Zhao's defense sought a suspended sentence, pointing out that others who admitted to similar violations, including BitMEX founder Arthur Hayes, were not jailed.

Changpeng Zhao was sentenced to 4 months in prison. That sentence, handed down by U.S. District Judge Richard Jones in Seattle, is well short of the 3 years prosecutors had sought and below the 1 to 2 years recommended by federal guidelines.

What is Zhao's fault?

Before handing down the sentence, Judge Jones accused Zhao of putting Binance's growth and profitability ahead of compliance with American laws.

Prosecutors argued that Binance used a “Wild West” model to attract criminals and failed to report more than 100,000 suspicious transactions with terrorist groups. They also noted that Zhao's exchange supported the sale of child sexual abuse material and received a significant portion of its revenue from ransomware.

Reaction from Binance and Zhao

Binance agreed to pay a fine of $4.32 billion, and Zhao paid a criminal fine of $50 million and restitution to the US Commodity Futures Trading Commission of $50 million.

Following the 2022 cryptocurrency price crash that exposed fraud and misconduct in the industry, several other crypto tycoons have also found themselves in the crosshairs of US authorities.