Former Binance CEO Changpeng Zhao Sentenced To Four Months In Prison

Former Binance CEO Changpeng Zhao was sentenced Tuesday to four months in prison for his role in failing to establish an effective anti-money laundering (AML) program at the cryptocurrency exchange.

Judge Richard Jones of the U.S. District Court for the Western District of Washington delivered the sentence.

The prosecution had initially sought a three-year prison term for Zhao, citing serious lapses in regulatory compliance during his tenure at Binance.

Zhao’s defense argued for probation, emphasizing his lack of direct knowledge of the illicit activities allegedly conducted through the platform.

In the courtroom, Judge Jones acknowledged the absence of evidence directly linking Zhao to specific illegal acts. This reduced the sentence from the recommended 18 months to four months.

During the proceedings, prosecutor Kevin Mosley argued, “Incarceration is necessary to reflect the seriousness of the offense,” adding that a lighter sentence like probation “will incentivize others to break the law and to do it in the largest scale possible.”

The defense highlighted Zhao’s vulnerability in prison due to his wealth and status.

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They also presented sealed documents to the court, which they claimed contained compelling reasons for a reduced sentence.

“I had a lot of quiet time alone to think and reflect,” Zhao told the court, regarding his oversight at Binance, and the shortcomings in the AML measures.

As part of a settlement with U.S. authorities, Zhao stepped down from his role at Binance last November, with the company agreeing to pay $4.3 billion in fines related to various regulatory enforcement actions.

This settlement, however, does not resolve an ongoing civil suit initiated by the U.S. Securities and Exchange Commission against Binance and Zhao.

Since his resignation, Zhao has shifted his focus to educational initiatives, founding Giggle Academy, which aims to educate young people about cryptocurrency and blockchain technology.

Following his departure, Richard Teng took over as CEO of Binance.

Zhao’s sentencing comes one the heels of another high-profile cryptocurrency case: Sam Bankman-Fried, former CEO of FTX, received a 25-year sentence in March.

He has since appealed the decision.

Legal experts and observers have cautioned against drawing parallels between the two cases, emphasizing that the charges stem from their actions rather than their personalities.

Alex Mashinsky, former CEO of Celsius, is also preparing for a September 2024 trial.

These developments will be a topic of discussion at Benzinga’s upcoming Future of Digital Assets event on Nov. 19, where industry experts will delve into the broader impact of regulatory actions on the future of digital currencies.

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