Binance founder Changpeng Zhao has been sentenced to four months in prison in the United States after pleading guilty to money laundering charges on Tuesday. This marks the most high-profile crypto case since Sam Bankman-Fried was jailed.
Changpeng Zhao, a Canadian, resigned from his post at the world’s largest cryptocurrency exchange platform late last year as part of a deal with US authorities. Investigations by two Treasury agencies revealed that Binance failed to prevent transactions by movements such as the Islamic State group, al-Qaeda, and the armed wing of Hamas.
Zhao pleaded guilty to violating US anti-money laundering laws, and Binance agreed in February to pay $4.3 billion to settle charges. Prosecutors had asked the judge to impose three years behind bars for a crime that typically results in probation.
Justice Department lawyers stated that Zhao made a “business decision” to violate US law, attracting users and lining his pockets. They emphasized that the sentence would send a message not just to Zhao but also to the world.
Attorneys for Zhao countered that probation would be an appropriate punishment, citing his acceptance of responsibility and philanthropic track record. Zhao himself stated on social media, “I made mistakes, and I must take responsibility.”
Binance was created in 2017 and dominated the crypto-trading market, turning Zhao into a billionaire. However, the company faced scrutiny after crypto markets collapsed and regulators probed its business. The industry has since bounced back, thanks in part to US regulators approving exchange-traded funds (ETFs) in bitcoin.
Binance’s new CEO, Richard Teng, stated that the company spent hundreds of millions of dollars on compliance and is working closely with regulators. The sentence marks a significant moment in the US government’s efforts to combat financial crimes in the cryptocurrency sector.