Changpeng Zhao, the founder of Binance, was given a four-month prison sentence on Tuesday for enabling widespread money laundering on the biggest cryptocurrency exchange in the world.
Although the judge commended Zhao for accepting responsibility for his misconduct, he expressed concern about the former CEO’s choice to disobey American banking regulations, which could have impeded the company’s rapid expansion. The defense team had requested that Zhao serve no time behind bars, even though the punishment was significantly shorter than the three years that the prosecution had requested.
“Despite wealth, power or status, no person — regardless of wealth — is immune from prosecution or above the laws of the United States,” U.S. District Judge Richard A. Jones told Zhao.
“I failed here,” Zhao told the court Tuesday according to AP News. “I deeply regret my failure, and I am sorry.”
After Binance agreed to pay $4.3 billion to settle related claims, Zhao entered a guilty plea to one count of failing to maintain an anti-money-laundering program in November and announced his resignation. According to U.S. officials, Zhao purposefully turned a blind eye to transactions that financed terrorism, illegal drug sales, and child sex abuse.
The judge was informed by defense attorneys William Burck and Mark Bartlett that no one had ever received a prison sentence for comparable Bank Secrecy Act offenses. Prosecutors countered that no one would enforce the law if Zhao was not sentenced to time in jail for the offense.
More than 1.5 million virtual currency deals worth over $900 million that went against US sanctions were approved by Binance, including those involving Iran, al-Qaeda, and the Hamas-affiliated al-Qassam Brigades.
According to Bartlett and Burck, Zhao did not personally know of any transaction that would have been prohibited by sanctions or laws imposed by the United States. Furthermore, they contended, Binance addressed a negligible percentage of questionable transactions for a business that processed roughly $500 million worth of transactions per day. Furthermore, they mentioned that before stepping down, Zhao started implementing reforms to make Binance an example of compliance with financial transparency laws.
Zhao stated that there was “no excuse for my failure to establish the necessary compliance controls at Binance” in a letter to the court.
“I wish I could change that part of Binance’s story. But under my direction, Binance has now implemented the most stringent anti-money laundering controls of any non-U.S. exchange, and those controls have been in place since 2022,” he added.
“He says in hindsight he should have done a better job,” Justice Department lawyer Kevin Mosley told Jones. “This wasn’t a mistake. When Mr. Zhao violated the BSA he was well aware of the requirements.”
Zhao gave the order to conceal customers’ locations within the United States, authorities said, even though he was aware that Binance needed to implement anti-money-laundering procedures.
Taking that into consideration, the judge sentenced Zhao to four months instead of the five months that U.S. Probation and Pretrial Services had suggested.
Market crashes and scandals have plagued the bitcoin sector most recently. Nigeria has requested that Binance and two of its officials stand trial for alleged tax evasion and money laundering.
