Changpeng Zhao- the billionaire founder of Binance, was sent to a low-security federal facility where he will spend the next four months. The defense team from Latham & Watkins confirmed Zhao’s custody as reached in the trip.
Zhao testified in April to accusations regarding ransomware laundering and acknowledged that Binance, the cryptocurrency exchange he created, sustained from this criminal activity. The preliminary sanction proposed by the court was three years imprisonment; however, Zhao’s defense asked for five months of probation in the court session. The April sentencing guidelines called for 12 to 18 months in prison. U. S. District Judge Richard Jones finally imposed a four-month imprisonment on Changpeng Zhao.
Zhao regretted not taking further action to implement the necessary measures against money laundering in Binance. He regretted that they said he was sorry and explained, “I believe the first step of taking responsibility is fully accepting the error.
Changpeng Zhao Steps Down Amid Binance Settlement
In November 2023, Zhao was to sign a plea bargain with the U. S. government after a lengthy investigation in Binance. In this regard, during the announced settlement, Zhao had to step down as the head of the company. His crimes included a blatant violation of the Bank Secrecy Act, going against the law by not putting into place an adequate AML program, and letting Binance continue to process transactions with the help of illicit funds, including those between residents of the U. S. and residents in other sanctioned areas.
Advertisement
Therefore, to punish the U. S., which had violated the Geneva accord, I. S. imposed $4. and $3 billion in fines and forfeiture against Binance, with Zhao saying he has provided $50 million surety. The arrest of Zhao paves the way for growing attacks from another significant unlawful instance in the crypto market.
Criminal charges were filed against SBF FTX Exchange founder Sam Bankman-Fried, who is now in jail and serving a quarter-century imprisonment for fraud conspiracy that led to the failure of FTX Exchange and its linked hedge fund, Alameda Research. While Zhao entered a plea bargain and received a nonguilty verdict, Bankman-Fried did not, and his conviction was preceded by the cooperation of other executives from his company with the prosecutors.
Zhao’s prison sentence may be a watershed in the future of the cryptocurrency industry. Binance and himself incur hefty fines, meaning there are strict measures if companies and individuals don’t adhere to financial laws. This case makes it possible, in the meantime, for the maturing process of the industry to reaffirm that you must have extra-tight anti-money laundering rules at your disposal as a future dedicated crypto-founder, such as Changpeng Zhao.
Maxwell Mutuma
Maxwell is a crypto-economic analyst and Blockchain enthusiast, passionate about helping people understand the potential of decentralized technology. He writes extensively on topics such as blockchain, cryptocurrency, tokens, and more for top publications such as Coingape, Coin Edition, and The Coin Republic. His goal is to spread knowledge about this revolutionary technology and its implications for economic freedom and social good.