Binance founder Changpeng Zhao was sentenced to four months in prison for failing to establish adequate anti-money laundering protections. Zhao, once the head of the largest crypto exchange in the world, pleaded guilty in November 2023.
Judge Richard Jones says that Zhao prioritized “Binance’s growth and profits over compliance with US laws and regulations.” While Jones doesn’t think Zhao is likely to reoffend, the scale of the crime is notable.
Binance “violated US law on an unprecedented scale”
Though Zhao is not as well-known as FTX fraudster Sam Bankman-Fried, he is a more important figure in the crypto world. The Chinese-Canadian entrepreneur founded Binance in 2017. Though he was required to step down as CEO of the exchange as part of his plea agreement, he is still the controlling shareholder of the company, which one person told Bloomberg was “a massive sh*tcoin casino.” Binance listed many more tokens than competitors such as Coinbase.
Prosecutors requested three years of prison time, double the sentencing guideline of 18 months, because the “scope and ramifications of Zhao’s misconduct were massive,” they wrote in their sentencing memo. They also suggested that Zhao’s sentence should “reflect the significant harm to US national security caused by his criminal acts.”
Binance allowed sanctions violations of more than$898 million, according to prosecutors, and “violated US law on an unprecedented scale.” Zhao and other Binance executives didn’t comply with US laws, including the Bank Secrecy Act (BSA), and didn’t adequately implement anti-money laundering efforts. As a result, Iranian customers were able to transact at least $1.1 million with US customers in violation of sanctions. Other sanctioned countries, such as Cuba and Syria, were able to transact as well.
Zhao’s lawyers, in their own sentencing memo, said that Zhao deserved no jail time, as “no defendant in a remotely similar BSA case has ever been sentenced to incarceration.” Zhao traveled from his home in the UAE to enter his guilty plea. He has remained in the US “away from his home, partner, and young children for five and a half months,” his lawyers wrote. Besides, Binance has taken action to fix their anti-money laundering procedures, they wrote.
In the crypto world, Zhao has long been known as a cowboy with a reputation for flouting US laws. In October 2022, Sam Bankman-Fried, CEO of rival exchange FTX, tweeted (and deleted) that he was “excited to see [Zhao] repping the industry in DC going forward! uh, he is still allowed to go to DC, right?” A week after that, Zhao tweeted he’d sell his holdings of FTX’s token in response to a blockbuster story in CoinDesk. Since Binance had been an early investor in FTX, that was a pretty sizable amount. “We won’t support people who lobby against other industry players behind their backs,” Zhao said.
Zhao has already agreed to pay a fine of $50 million, a pittance compared to the estimated $33 billion fortune he made with Binance. He also agreed not to appeal any sentence up to 18 months.
FAQs
Changpeng Zhao, the founder of the world's leading cryptocurrency exchange, was sentenced on Tuesday to four months in prison after pleading guilty last year to charges that he failed to maintain an effective anti-money laundering program.
What is the summary of Binance? ›
Binance is an online exchange where users can trade cryptocurrencies. It supports hundreds of the most commonly traded cryptocurrencies. Binance provides a crypto wallet for traders to store their electronic funds.
How much money does Changpeng Zhao have? ›
How old is Binance now? ›
Binance was founded in 2017 by Changpeng Zhao, a developer who had previously created high-frequency trading software. Binance was initially based in China, then moved to Japan shortly before the Chinese government restricted cryptocurrency companies.
Will Binance CEO go to jail? ›
SEATTLE, April 30 (Reuters) - Changpeng Zhao, the former chief executive of Binance, was sentenced on Tuesday to four months in prison after pleading guilty to violating U.S. laws against money laundering at the world's largest cryptocurrency exchange.
How much money was withdrawn from Binance? ›
Investors withdrew as much as $3 billion from Binance on Tuesday, according to blockchain analytics firm Nansen, as a deluge of negative headlines about the cryptocurrency industry rattled users of the world's largest exchange.
What was Binance accused of? ›
Cryptocurrency has experienced ups and downs, and a new chapter in the cryptocurrency saga has emerged. Cryptocurrency exchange giant Binance faces federal charges for fraud and money laundering. Binance has been under scrutiny for years, with federal investigations dating back to 2018.
Does Binance still exist? ›
Today, Binance is the world's leading blockchain ecosystem, with a product suite that includes the largest digital asset exchange.
What is the conclusion of the Binance? ›
In conclusion, Binance is a safe and legitimate cryptocurrency exchange that offers low fees, strong security measures, and a wide range of currencies. Its user-friendly interface and helpful customer service make it a top choice for many traders.
Who is the richest person in Binance? ›
Still, Zhao will enter the history books as the richest person ever to do time in US federal lockup since his ownership of Binance — and an estimated $43 billion personal fortune tied to it — remain intact. His wealth is likely to grow even bigger as Binance's business accelerates amid crypto's latest bull run.
Satoshi Nakamoto, the pseudonymous creator of Bitcoin, is believed to own the most bitcoins, with estimates suggesting over 1 million BTC mined in the early days of the network.
Who is the wife of Binance CEO? ›
He is currently based in Dubai, United Arab Emirates. Zhao met his wife Yang Weiqing in 1999 and they married in 2003. They have two children. Although still married to Yang, Zhao has been in a "life partner" relationship with his business partner and fellow Binance co-founder, He Yi, since they met in 2014.
What happened to the CEO of Binance? ›
Key Takeaways. Binance founder Changpeng Zhao was sentenced to four months in prison for violations of the Bank Secrecy Act during his time at the crypto exchange. The Department of Justice (DOJ) sought a three-year prison sentence, while CZ's lawyers requested probation instead.
What is Satoshi Nakamoto's net worth? ›
Nakamoto owns between 750,000 and 1,100,000 Bitcoin. In November 2021, when Bitcoin reached a value of over $68,000, his net worth would have been up to $73 billion, making him the 15th-richest person in the world at the time.
Is Binance still strong? ›
Despite its volatile past, Binance remains a popular choice among crypto traders due to its extensive offerings, competitive fees, and strong security measures. You can transfer funds off the exchange into a personal hardware wallet for additional security after you are done trading.
How did Binance coin get so high? ›
BNB is Binance's native alternative coin (altcoin), and has a maximum supply of 200 million, with a circulating supply that is considerably lower at 153 million. This reduced supply is due to buy-backs of BNB implemented by Binance, which have contributed to the coin's strong price growth.
How much did Binance start with? ›
After stints as a technology leader at crypto wallet provider Blockchain and crypto marketplace OKCoin, CZ ventured into building his own exchange, combining the tech performance of high-frequency trading platforms he developed with the promise of crypto. As a result, he launched Binance through a $15 million ICO.
Who co founded Binance? ›
Changpeng Zhao, the billionaire co-founder and former CEO of Binance, is expected to see his mammoth wealth remain intact and likely continue to climb even as he faces time behind bars after his sentencing in a Seattle court.
Who made Bitcoin? ›
Bitcoin was created by an anonymous person or group using the pseudonym Satoshi Nakamoto. Nakamoto published a whitepaper titled "Bitcoin: A Peer-to-Peer Electronic Cash System," outlining the concept of a decentralized digital currency.
