Binance founder Zhao Changpeng (趙長鵬) was ordered to spend four months in prison for failures that allowed cybercriminals and terrorist groups to freely trade on the world’s largest cryptocurrency exchange.
Zhao, 47, was sentenced on Tuesday by US District Judge Richard Jones in Seattle, Washington. The billionaire’s mother and sister watched his sentencing from the front row of the courtroom.
The sentence was far below the three years requested by prosecutors, who had sought to make an example out of Zhao to a heavily scrutinized industry rebounding from a slew of high-profile scandals. It is the first time a chief executive officer has ever gone to jail for a bank secrecy act violation in the US, a charge that has been used repeatedly in crypto prosecutions in the past few years.
Photo: Bloomberg
In imposing the sentence, Jones said he hoped Zhao understood that, despite “wealth, power and status,” no person is immune from prosecution or above the law.
Zhao, who did not visibly react to the sentence, is expected to serve his four-month stint at Seattle’s Federal Detention Center, SeaTac. A date for Zhao to turn himself in to prison authorities has not been decided, although he has expressed eagerness to get back to his family in the United Arab Emirates.
In a post on X after the sentencing, Zhao said: “I will do my time, conclude this phase and focus on the next chapter of my life (education).”
He added that he “will remain a passive investor (and holder) in crypto.”
Zhao pleaded guilty in November last year for failing to implement an adequate money laundering program at Binance, an exchange that began in Shanghai in 2017 and ballooned to process trillions of dollars worth of trades each year. At the same time, Binance pleaded guilty to anti-money laundering and sanctions law violations, and agreed to pay US$4.3 billion to resolve investigations with the US department and other regulators.
US federal prosecutor Kevin Mosley said the Binance founder’s violations of US law were intentional, not an oversight.
“This wasn’t a mistake,” Mosley said. “It wasn’t a regulatory ‘oops.’”
The failure to maintain an adequate money laundering program opened the door to illicit actors, including crypto mixers, hackers and terrorist groups including al-Qaeda and Islamic State, to trade Bitcoin on the platform, Mosley said.
In an example detailed by the Financial Crimes Enforcement Network, or FinCEN, the al-Qassam Brigades, the military wing of Hamas, used Bitcoin transactions to raise money for the Palestinian resistance.
Hamas, which has been designated by the US as a terrorist organization, murdered more than 1,200 Israelis on Oct. 7 last year.
Despite Zhao’s well-publicized criminal case, he has held onto his personal fortune. His wealth ballooned by US$25 billion as the crypto industry recovered last year and he is currently ranked as the 42nd richest person worldwide, according to Bloomberg Billionaires Index.
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