Binance Founder Changpeng Zhao Sentenced to Four Months in Prison

May. 2, 2024
Binance Founder Changpeng Zhao Sentenced to Four Months in Prison

Changpeng “CZ” Zhao, the founder and former CEO of crypto exchange Binance, was sentenced to four months in jail on April 30 in Seattle after pleading guilty to anti-money laundering violations.

With buzz-cut hair and a navy blue suit, Zhao learned his fate in court, accompanied by his son, nephew, mother, and sister. Last year, he pleaded guilty to money laundering and sanctions violations and resigned as CEO of Binance. Zhao agreed to a $50 million fine as part of the plea deal, while the exchange paid $4.3 billion in compensation.

The Department of Justice (DOJ) filed a court filing on April 23 recommending that Zhao should serve 36 months in prison. Prosecutors emphasized that he failed to establish a robust AML program at Binance.

In their previous sentencing memo, prosecutors said:

“Zhao’s willful violation of U.S. law was no accident or oversight. He made a business decision that violating U.S. law was the best way to attract users, build his company, and line his pockets.”

During Tuesday’s sentencing, he apologized and said he wanted to take responsibility for his “mistakes.” He also said Binance is cooperating with the government and implemented a Know Your Customer (KYC) and anti-money laundering (AML) programs, according to reporting from The Verge.

In a Seattle courtroom, Judge Richard Jones stated that “there’s no evidence that the defendant was ever informed” of illegal activity at the exchange. He then disagreed with the DOJ’s recommendation to increase the baseline sentencing guideline of 10 to 16 months in prison and up to three years of supervised release. 

Meanwhile, lawyers representing Zhao requested probation from the court. They said the former executive “deeply regrets his offense” and has demonstrated his acceptance of responsibility. Moreover, Zhao’s lawyer, William Burck, pointed out that Zhao faces risks in some security facilities due to his fame, wealth, and cooperation with the government.

Zhao’s Four-month Jail Sentence Sparks Mixed Early Reactions

Shortly after the news broke that Zhao would serve four months in federal prison, two things happened. First, with a fortune valued at more than $40B, CZ will become the richest person ever to serve time in a US federal prison. Second, the internet lit up with reactions to the news that an individual who played a key role in building the world’s largest crypto exchange will face jail.

The former chief strategy officer at Binance, Patrick Hillmann, posted on X that he had personally witnessed CZ rebuilding the executive team around him in 2021 to prepare Binance for global regulation. He also stated that Judge Jones had delivered a fair sentence, considering CZ’s missteps and his attempts to correct past mistakes.

Better Markets CEO Dennis Kelleher criticized Tuesday’s proceedings, labeling the sentencing as an “egregious miscarriage of justice” in a post the same day. He said the DOJ calmly dealt with CZ. Kelleher pointed out the 25-year sentence of CZ’s former rival, ex-FTX CEO Sam Bankman-Fried.

Moreover, Terrence Yang, Managing Director at Swan Bitcoin, stated that despite the DOJ lacking sufficient evidence for a three-year sentence for CZ, he finds it surprising that CZ is only receiving a four-month sentence instead of 18.

Syed Ali Haider

Researcher & Editor
Ali Haider is a Blockchain enthusiast and writer passionate about enhancing the acceptance, adoption, and integration of Blockchain technology worldwide. He has also advocated for digital freedom and cybersecurity for many years.