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Former Binance CEO Changpeng “CZ” Zhao has been sentenced to four months in prison for money laundering violations.
The sentencing comes after Zhao pleaded guilty last November to failing to establish a proper anti-money laundering program at Binance, the largest cryptocurrency exchange by trading volume.
Zhao’s downfall and legal battle with DOJ
Changpeng Zhao, who founded Binance in 2017, led the company to become a dominant force in the crypto industry.
However, his tenure was marred by controversy as U.S. Justice Department officials accused him of prioritizing growth over compliance with U.S. financial rules leading to funds linked to cybertheft and terrorism flowing through Binance undetected.
The U.S DOJ swung into action and its crackdown culminated in a $4.3 billion settlement between Zhao, Binance, and U.S. law officials.
As part of the DOJ settlement, Binance agreed to exit the U.S. market entirely, and Zhao agreed to pay a $50 million fine and refrain from involvement in Binance operations for at least three years.
However, despite Zhao pleading guilty and agreeing to pay the fine, his legal woes continued as he faced sentencing for money laundering charges.
Changpeng “CZ” Zhao sentencing
As the long legal battle unfolded Changpeng “CZ” Zhao faced a significant setback after a federal judge in Seattle imposed travel restrictions on him, preventing him from leaving the United States in the months leading up to his sentencing.
Furthermore, federal prosecutors argued for a harsher sentence than the 18 months suggested under federal guidelines, citing Zhao’s “willful violation of U.S. law” and his potential as a flight risk due to his considerable wealth. However, Judge Richard Jones, who was preceding over the court hearing rejected the DOJ proposal signalling a more lenient sentencing.
And finally after a long legal battle and Zhao’s legal team advocating for probation instead of prison time, citing precedents in similar cases, the judge handed down a four-month prison sentence.
And while the prison time is lower than what the DOJ had requested, it underscored the seriousness with which the DOJ viewed Zhao’s actions and served as a warning to others in the cryptocurrency industry.
While the outcome of Zhao’s sentencing will likely have far-reaching implications for Binance and the broader cryptocurrency industry, Changpeng “CZ” Zhao remains an influential figure. He recently announced plans to launch Giggle Academy, a nonprofit online education platform aimed at making basic education accessible and entertaining to children worldwide.
For Binance, the road ahead is uncertain as it still faces challenges, including an ongoing lawsuit brought by the Securities and Exchange Commission alleging violations of U.S. securities laws.
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