Binance Founder Changpeng Zhao Sentenced To Four Months In Jail

Changpeng “CZ” Zhao, the founder of cryptocurrency exchange Binance, has been sent to prison for four months in the US after confessing that he breached anti-money laundering regulations.

Federal attorneys had been requesting a three-year sentence, which was twice the sentencing guidelines, whereas Zhao’s legal team had pushed for probation.

Binance Agreed To Surrender $2.5 Billion To The Government

In November, Zhao confessed to his crimes as part of an agreement between Binance and CFTC, the Treasury Department, and the Department of Justice.

This deal intended to resolve accusations that the company breached laws, operated an unauthorized money-transmitting business, and failed to sustain an appropriate anti-money laundering program.

The biggest crypto exchange in the world agreed to give up $2.5 billion to the government and disburse a penalty of $1.8 billion.

Meanwhile, Zhao admitted that he violated the Bank Secrecy Act and caused a banking entity to breach the same act. He decided to pay a fine of $50 million, resign as Chief Executive Officer, and be banned from any participation in managing Binance, which he established in 2017.

Binance stated that it is happy with the culture of transparency, security, and compliance the team has established over the last few years. It added that the company anticipates enhancing the business environment as it moves forward.

Binance Seeks To Position Itself As The Leading Global Cryptocurrency Exchange

Binance Holdings Ltd., known as Binance, operates the largest cryptocurrency exchange globally, in terms of daily cryptocurrency trading volume. It was established in 2017 by Changpeng Zhao, a developer with experience in creating high-frequency trading software.

Initially headquartered in China, Binance relocated to Japan before the Chinese government imposed restrictions on cryptocurrency firms. Following this, Binance moved its operations to Malta and currently does not have an official corporate headquarters.

Binance has faced legal action and regulatory scrutiny over the years. Consequently, it has been prohibited from operating or instructed to halt its operations in certain nations, leading to the imposition of fines. There have been accusations suggesting that Binance might be utilized as a means of financing terrorist organizations.

In 2021, Binance faced investigations by both the United States Internal Revenue and Service Department of Justice over accusations of tax offenses and money laundering. Binance was directed to cease all regulated activities in the United Kingdom in June 2021 by the UK’s Financial Conduct Authority.

During the same year, Binance was accused of providing client information, such as addresses and names, to the Russian government. The company hopes to move forward after the sentencing of Zhao and after agreeing to pay the fines imposed by regulatory authorities.