- Changpeng Zhao will serve four months in US prison following his 2022 guilty plea of failing to protect against money laundering
- Zhao faced up to 18 months for failure to prevent money laundering but received a reduced sentence
- Judge Richard Jones considered Zhao’s positive character references and charity work in issuing the lenient sentence
Binance co-founder and former CEO, Changpeng Zhao, will face just four months in prison in the US after the sentencing judge said that he was not aware of much of the wrongdoing at the company. Zhao faced up to 18 months in prison after pleading guilty to failure to protect against money laundering, but Judge Richard Jones noted that there was no evidence that the defendant was “ever informed” of the illegal activity going on at the exchange. He also based his low tariff on glowing commendations about Zhao from former colleagues, associates, and friends, also noting Zhao’s charity work.
Prosecution Pushed for Three-year Term
Zhao’s guilty plea was part of a wider deal agreed last year that also saw him pay a $50 million penalty and Binance pay a record $4.3 billion penalty for violating the Bank Secrecy and International Emergency Economic Powers acts and also failing to register as a money transmitting business.
Prosecutors had recommended a three-year prison sentence for Zhao, emphasizing the need to send a strong message internationally, but Zhao’s legal team argued for probation, citing his cooperation with the Department of Justice. Judge Jones rejected the prosecution’s calls, saying that Zhao wasn’t personally responsible for what went on and was not aware that it was happening.
Letters of Support Saved the Day
The US Department of Justice previously outlined how Zhao and Binance had violated compliance regulations, enabling millions of dollars in transactions to evade US sanctions on Iran and facilitating transfers to the Russian darknet marketplace Hydra. The government also linked the exchange to other illicit activities, including drug trafficking and child exploitation.
Judge Jones also said he was swayed by the volume of letters supporting CZ from friends, family, and associates, noting, “I don’t think I’ve ever seen a volume of letters.” This led him to form a more positive impression of Zhao than the prosecution was painting, saying, “To be honest with you, sir, everything I see about your history and characteristics are of a mitigating nature.”
Zhao will see this result as a major win, although it means he won’t be reunited with his family until around September, some 10 months after he first flew to the US to arrange his guilty plea.
