Binance founder Changpeng Zhao, the second biggest face of the crypto world after FTX's Sam Bankman-Fried, will serve four months in prison for violations of money laundering rules in the U.S.
The Chinese-Canadian entrepreneur took to X to say he would serve jail, "conclude this phase and focus on the next chapter".
"I would like to thank everyone for your care and support, be it writing letters, showing support on X, or in any other form. They all mean a lot to me and keep me strong. I will do my time, conclude this phase and focus on the next chapter of my life (education)," Zhao writes.
After founding Binance in 2017, Zhao's platform had gained immense popularity on the back of euphoria around crypto. It became the world’s largest cryptocurrency exchange in 2018. "It (Binance) grew quickly to dominate the cryptocurrency space by targeting the lucrative U.S. market, particularly high-volume “VIP” customers," prosecutors alleged in their court submission, seeking around three years in jail for the crypto billionaire.
Zhao, who made a fortune worth $33 billion from Binance, had pleaded guilty to the violations in November 2023. Prosecutors argued that he should be given 3 years in jail, much more than 18 months as per the sentencing guidelines, but the court agreed to reduce the sentencing after arguments presented by his lawyer, who said he deserved less sentencing.
His lawyers said "no defendant in a remotely similar BSA (Bank Secrecy Act) case has ever been sentenced" to jail time.
"I will remain a passive investor (and holder) in crypto. Our industry has entered a new phase. Compliance is super important," Zhao said on X, adding that a "silver lining of this whole process is that Binance has been under the microscope. And funds are SAFU".
Prosecutors said in court that Zhao willfully failed to implement an effective compliance programme and disregarded U.S. law, and Binance caused violations of U.S. sanctions in excess of $898 million.
They alleged he led Binance to become the world’s largest cryptocurrency exchange by exploiting the U.S. market while defying U.S. law.
The violation of the BSA of the US helped Zhao to avoid "comprehensive controls" that block questionable transactions, as per prosecutors. “Between January 2018 and May 2022, Binance caused at least 1.1 million transactions in violation of U.S. sanctions between customers in the United States and customers ordinarily resident in Iran, with an aggregate transaction value of at least $898,618,825,” they alleged.
Binance is also accused of causing millions of dollars in trades between U.S. customers and customers in other comprehensively sanctioned jurisdictions, including Cuba, Syria, and the Ukrainian regions of Crimea, Donetsk, and Luhansk.
Zhao's lawyers in their submission to the court said Zhao should not be the first to get such sentencing. "He is a first-time, non-violent offender who committed an offence with no intention to harm anyone. He presents no risk of recidivism. He has appeared in this country voluntarily to accept responsibility."
Zhao is the second biggest name in the crypto world to get sentencing after Sam Bankman-Fried. Once refered as the ‘crypto king’, Fried was convicted of several counts of fraud, conspiracy and money laundering. He was given a jail time of 25 years but he has appealed against his sentence.
