Binance Crypto Founder Zhao Commences Incarceration in American Penitentiary

Changpeng Zhao, the previous CEO of Binance, a well-known cryptocurrency exchange, has reportedly begun serving his four-month prison sentence in a minimum-security federal prison in the United States. On Friday, Zhao surrendered himself to prison officials in Lompoc, California, as reported by CNBC.
According to the news, U.S. District Judge Richard Jones sentenced Zhao, also known as “CZ,” to prison in April after he pleaded guilty to violating U.S. money laundering laws at Binance, the crypto exchange he founded in July 2017.
Zhao’s imprisonment marks the second instance of a major crypto mogul being incarcerated in the U.S. Earlier in March, Sam Bankman-Fried, the founder of FTX Exchange, received a 25-year sentence for an $8 billion fraud and related crimes.
Before delivering the sentence, Judge Jones criticized Zhao for prioritizing Binance’s profits and growth over compliance with U.S. laws, as reported by Reuters in April. Binance currently holds the position of the world’s largest crypto exchange.
During his defense, Zhao expressed his apologies to the court, stating:
The sentence handed down by Judge Jones was relatively lenient compared to the three-year demand from the prosecutors. Additionally, it fell short of the maximum sentence of one to one and a half years according to federal guidelines.
Binance faced accusations of neglecting to identify or report money laundering risks. U.S. prosecutors had been investigating Binance and Zhao for several years. In November, CZ reached an agreement with the U.S. government, resulting in his resignation as Binance CEO.
According to Bloomberg, Zhao, who possesses a personal fortune of up to $40 billion, still retains a 90% ownership stake in the cryptocurrency exchange.
As part of the settlement with federal authorities, Binance agreed to pay $4.3 billion in fines and other penalties. Zhao himself paid a fine of $50 million, as per the CNBC report.
Prosecutors charged CZ with failing to establish an effective anti-money laundering program at Binance. The exchange was accused of allowing bad actors involved in child exploitation, narcotics, and terrorist financing to operate freely. Authorities claimed that Binance lacked the necessary protocols to identify and report suspicious transactions.
This article was originally reported by Jeffrey Gogo for Cryptopolitan.