The co-founder and former Chief Executive Officer, Binance, Changpeng Zhao, has been sentenced to four months in prison in the United States for flouting money laundering laws.
A US court in Seattle jailed Zhao after he pleaded guilty to violating the US money laundering laws at the world’s largest cryptocurrency exchange.
With the personal fortune estimated at $43 billion, Zhao’s sentencing makes him the richest prisoner in the US and probably in the world.
The sentence was slapped on him by the United States District Judge Richard Jones in Seattle, who rejected prosecutors’ request that the 47-year-old Zhao serve a three-year term.
His sentence marked another disappointing and criminal development bedevilling the cryptocurrency industry, as Zhao, became the the second major crypto boss to be sentenced to prison after Sam Bankman-Fried.
In March, Bankman-Fried received 25 years behind bars for stealing $8 billion from customers of his now-bankrupt FTX exchange.
FTX founder Bankman-Fried jailed for stealing customers’ $8 billion.
In Zhao’s case, he pleaded guilty in November to one count of failing to take required anti-money laundering measures and stepped down as Binance agreed to pay $4.3 billion to settle related allegations.
US officials said Zhao deliberately took his hands off as people engaged in transactions that supported child sex abuse, the illegal drug trade, and “terrorism”.
Zhao said before US District Judge Richard A Jones issued the sentence: “I failed here. I deeply regret my failure, and I am sorry.
“I believe the first step of taking responsibility is to fully recognise the mistakes. Here I failed to implement an adequate anti-money-laundering program.
“I realise now the seriousness of that mistake.”
Prosecutors had told the judge a strict sentence would send a clear signal to other would-be criminals.
“We are not suggesting that Mr. Zhao is Sam Bankman-Fried or that he is a monster,” prosecutor Kevin Mosley said.
But Zhao’s conduct, he said “wasn’t a mistake. This wasn’t a regulatory ‘oops’”.
The three-year prison term prosecutors sought was more than twice the guideline range for the crime. If he did not receive time in custody for the offence, no one would, rendering the law toothless, they argued.
Zhao had been free on a $175 million bond, and agreed not to appeal any sentence within federal guidelines. He also paid $50 million to the Commodity Futures Trading Commission.
Meanwhile the several governments have been clamping down on cryptocurrency as it becomes an illegal machinery of moving money.
Recently, the United Kingdom government said more than £1 billion illicit funds were moved through cryptocurrency yearly.
It revealed that drug dealers, terrorists and other criminals are using it to raise and hide funds, adding that the law enforcement agents have been unleashed to go after the operators.
Similarly, the Nigerian government through the Governor of the Central Bank of Nigeria, Dr Yemi Cardoso, said about $26 billion was moved without a trace with the cryptocurrency industry in Nigeria in 2023.
