Former Binance CEO Changpeng Zhao sentenced to 4 months in prison
The sentencing closes the book on the DOJ’s settlement with Binance and its former CEO
Binance co-founder Changpeng Zhao | Ben McShane/Web Summit via Sportsfile/"BE6_1636″ (CC license)
Former Binance CEO Changpeng Zhao was sentenced to 4 months in US prison today.
The sentence is lower than some bettors expected, with those on Polymarket expecting the judge to hand down a sentence of six months.
Zhao will now head to a US prison to serve out his sentence, which is lower in comparison to the 36 months sought by the Department of Justice. Zhao’s team only sought five months probation.
Zhao also must pay a $50 million fine, as stipulated in his guilty plea signed in November.
Prosecutors aimed high when requesting Zhao’s sentence — which is double the 18 months at the high end of the guidelines — because they wanted the sentence to match the “gravity” of Zhao’s crimes, the government wrote in their sentencing memo last week.
“If Mr. Zhao does not face incarceration after deliberately and willfully planning to violate U.S. law to build the largest crypto exchange in the world and get rich in the process … then no one will face incarceration and the BSA will for intents and purposes be a dead letter,” prosecutors argued at the hearing, according to CoinDesk’s Nikhilesh De.
We broke down what you need to know about the sentencing in our X article:
Now what?
Zhao’s sentencing comes less than a month after former FTX CEO Sam Bankman-Fried received his own legal judgment.
Unlike CZ, SBF didn’t reach a deal with the government and was instead found guilty of fraud by a jury in New York at the end of last year. He’s now serving a sentence of 25 years; far more jail time than the former Binance CEO.
As part of his plea deal, he agreed not to contest a sentence of 18 months.
While this wraps up the DOJ’s actions against Zhao and Binance, the two still face charges from the Securities and Exchange Commission. The regulator was notably absent from the DOJ’s settlement. The agreement included the Commodity Futures Trading Commission, Treasury’s Financial Crimes Enforcement Network, and Office of Foreign Assets Control.
The SEC and Binance, in court documents earlier this month, said that they were in the middle of the discovery process. The filing noted that Zhao “served responses to the SEC’s interrogatories” and the two continue to discuss the SEC’s document requests.
What led to Zhao’s jail time
Zhao’s guilty plea was part of the multibillion-dollar settlement the government reached with Binance at the end of last year. The agreement’s sticker price, set at $4 billion, shocked many, although the investigation into the crypto exchange had been reported several times over a period of years.
Prior to the judge’s decision, the former executive received 161 letters of support from family and friends, asking the judge for leniency.
Zhao, in his letter to the judge, wrote that there was “no excuse” for the lack of anti-money laundering and compliance controls at Binance. He said he wished he could “change that part of Binance’s story.”
Since late last year, Zhao has been on US soil as ordered by the court. The former executive is not a US citizen — something that his team brought up to argue for leniency — and resides with his family in the United Arab Emirates. Zhao, his lawyers said ahead of the sentencing, cannot be sent to a minimum security facility because he’s not a US citizen, which they wanted taken into account.
While the Tuesday hearing shuts the book on the DOJ’s case against Binance and Zhao, the crypto enforcement actions against others in the Web3 space don’t end there. Just last week, the Justice Department arrested the founders of Samourai Wallet, alleging that it acted as a mixer for criminal funds. It also has open cases against Tornado Cash’s Roman Semenov and Roman Storm.
Want more details about CZ’s sentencing and what’s next? Subscribe to the Empire newsletter here. ICYMI, Blockworks reporter Casey Wagner gave some insight into the hearing ahead of CZ’s Tuesday court date.
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