Former Binance CEO CZ sentenced to four months in prison

Changpeng Zhao, CEO of Binance.

 

So, the US isn't playing around when it comes to cracking down on some serious stuff—like child sex abuse, drug trafficking, and terrorism. Changpeng Zhao, the big shot who used to run Binance, got slapped with a four-month jail sentence after admitting he messed up on some US anti-money laundering rules. This all went down in Seattle, where Judge Richard Jones gave Zhao a break, saying no to the three-year stretch the prosecutors wanted.

Zhao, also known as "CZ," used to be the big cheese in the cryptocurrency world, but now he's joining the ranks of the second major crypto boss to get locked up, right after Sam Bankman-Seared. In November, Zhao copped to not doing what he was supposed to with anti-money laundering measures, and he stepped down from Binance. The company also had to cough up $4.3 billion to settle the mess.

US authorities are pointing fingers at Zhao, saying he turned a blind eye while people were doing shady deals that supported some seriously bad stuff like child abuse, drug trafficking, and terrorism. Zhao himself admitted he messed up big time, saying sorry to Judge Jones.

The prosecutors were pushing for a harsher sentence to send a message to other potential crooks. They weren't trying to paint Zhao as a monster like Bankman-Seared, but they weren't letting him off easy either. They said what Zhao did wasn't just a whoopsie—it was a serious violation.

The prosecutors wanted Zhao locked up for three years, which is more than double the usual penalty for this kind of crime. They argued that if Zhao didn't do time, it would basically be a free pass for breaking the law.

Zhao was out on a $175 million bond and agreed not to appeal any sentence that fell within the federal guidelines. He also handed over $50 million to the Commodity Futures Trading Commission.

But wait, there's more! Binance, under Zhao's watch, allowed over 1.5 million crypto trades worth almost $900 million that violated US sanctions. These deals involved groups like Hamas' Qassam Brigades, al-Qaeda, and Iran. The US Department of Justice said Zhao was basically putting profits over following the rules.

Zhao's lawyers argued he shouldn't do any jail time, pointing out that he willingly flew from the UAE, where he lives, to the US to face the music, even though there's no extradition agreement between the two countries. Plus, they said, nobody has ever been sent to jail for breaking the Bank Secrecy Act like Zhao did.

Despite Zhao's regrets and promises to clean up his act, the prosecutors weren't buying it. They said Zhao knew exactly what he was doing when he skirted the rules, and now he's got to face the consequences.

And it's not just Zhao feeling the heat—other crypto bigwigs are also in the crosshairs of US authorities after the crypto market went haywire in 2022, exposing fraud and misconduct left and right.

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