Binance Founder Changpeng Zhao was ordered to spend four months in jail for failures that allowed cyber criminals and terrorist groups to trade freely in the world’s largest business. cryptocurrency exchange,
Zhao, 47, was sentenced Tuesday by U.S. District Judge Richard Jones in Seattle. Dressed in a dark suit with a light blue tie, the billionaire arrived at the court accompanied by half a dozen lawyers. His mother and sister watched his sentencing from the front row of the courtroom.
The sentence was much less than the three-year sentence requested by prosecutors, who had sought to make Zhao an example for a heavily scrutinized industry reeling from several high-profile scandals. It is the first time that a chief executive has been jailed for violating the Bank Secrecy Act, a charge that has been used repeatedly in crypto lawsuits in recent years.
At sentencing, Jones said he hoped Zhao would understand that, regardless of “wealth, power and position”, no person is above prosecution or the law. Zhao, who declined to comment on the sentencing, is expected to serve his four-month term at Seattle’s federal detention center, SeaTac. A date has not been set for Zhao to turn himself in to prison authorities, although he has expressed his eagerness to return to his family in the UAE.
The sentencing concludes a years-long investigation by the Justice Department, which suspected Binance and the man known as ‘CZ’, one of the industry’s most recognizable figures. The case also comes on the heels of the 25-year prison sentence given to former crypto titan Sam Bankman-Fried, who stole billions of dollars from FTX clients.
Zhao’s lawyers said he could not spend time in the minimum-security facility, where most white-collar defendants end up, because he was not a U.S. citizen. His lawyers argued that this put him at greater risk than other prisoners, as they pleaded with Jones to spare him prison.
‘unprecedented’
Zhao’s lawyers pointed to cases involving similar banking law violations that resulted in probation, such as the prosecution of executives of crypto platform Bitmex. But Jones said this particular crime was “unprecedented” because it involved millions of dollars and illicit actors including terrorists and hackers transferred funds to Binance.
Zhao pleaded guilty in November to failing to implement an adequate money laundering program at Binance, an exchange that launched in Shanghai in 2017 and has grown to process trillions of dollars worth of trades each year. At the same time, Binance pleaded guilty to violating anti-money laundering and sanctions laws and agreed to pay $4.3 billion to resolve the investigation with the Justice Department and other US regulators.
Zhao, who moved to Canada from China at the age of 12 and later settled in Dubai, has since been barred from leaving the US. Addressing the judge on Tuesday, he expressed remorse and said he had traveled to Seattle to plead guilty last November rather than remain at his home in the United Arab Emirates, which does not have an extradition treaty with the US.
“I left my family and came to America to take responsibility for my actions,” Zhao said. “That’s because responsibility is a core value to me, and I live by that.” He described life outside of crypto, focusing on a philanthropic education project.
regulator ‘oops’
While federal sentencing guidelines called for a prison sentence of up to 18 months, the US government insisted on a longer sentence. Federal prosecutor Kevin Mosley said the violation of US law by the Binance founder was intentional, not an omission.
“It was not a mistake,” Mosley said. “It was not a regulatory ‘oops’.” But he also said the punishment the US sought was proportionate. Mosley said the government is not saying Zhao’s crimes amount to Bankman-Fried and that it is not “trying to kill the cryptocurrency industry.”
He focused on a phrase used by Zhao years earlier: “It is better to ask for forgiveness than permission.”
Mosley argued that by not asking for permission, Zhao made his company great and achieved fame, becoming a crypto celebrity while bypassing US compliance laws. Failure to maintain an adequate money laundering program opened the door for business to illicit actors including crypto mixers, hackers, and terrorist groups including al-Qaeda and ISIS. Bitcoin On the stage.
terrorist group
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 funds for the Palestinian resistance. Hamas, which is designated as a terrorist organization by the US, killed more than 1,200 Israelis on October 7.
The lack of proper compliance led some customers to do business with residents of Iran in violation of US sanctions. According to the government memo, between 2018 and 2022, Binance processed at least 1.1 million transactions that violated US sanctions, worth about $898 million.
While Zhao stepped down as CEO as part of his plea agreement with the government, he continued to own the company and “will make a nice profit,” Mosley said, arguing that the fine alone was insufficient. .
The judge said he was also troubled by the ‘it is better to apologize than permission’ statement, pointing out the irony of Zhao now appearing before him to apologise.
Zhao’s attorney Mark Bartlett said he couldn’t think of anything else a person could do to show his remorse.
“Did he make mistakes? Of course, that’s why we’re here,” Bartlett said.
Some of this was financially motivated, he said, but Zhao got into crypto “to change the world.”
Despite Zhao’s well-publicized criminal case, he has remained in control of his personal fortune. According to the Bloomberg Billionaires Index, his wealth increased by $25 billion last year due to the recovery in the crypto industry and he is currently ranked as the 42nd richest person in the world.
Zhao, 47, was sentenced Tuesday by U.S. District Judge Richard Jones in Seattle. Dressed in a dark suit with a light blue tie, the billionaire arrived at the court accompanied by half a dozen lawyers. His mother and sister watched his sentencing from the front row of the courtroom.
The sentence was much less than the three-year sentence requested by prosecutors, who had sought to make Zhao an example for a heavily scrutinized industry reeling from several high-profile scandals. It is the first time that a chief executive has been jailed for violating the Bank Secrecy Act, a charge that has been used repeatedly in crypto lawsuits in recent years.
At sentencing, Jones said he hoped Zhao would understand that, regardless of “wealth, power and position”, no person is above prosecution or the law. Zhao, who declined to comment on the sentencing, is expected to serve his four-month term at Seattle’s federal detention center, SeaTac. A date has not been set for Zhao to turn himself in to prison authorities, although he has expressed his eagerness to return to his family in the UAE.
The sentencing concludes a years-long investigation by the Justice Department, which suspected Binance and the man known as ‘CZ’, one of the industry’s most recognizable figures. The case also comes on the heels of the 25-year prison sentence given to former crypto titan Sam Bankman-Fried, who stole billions of dollars from FTX clients.
Zhao’s lawyers said he could not spend time in the minimum-security facility, where most white-collar defendants end up, because he was not a U.S. citizen. His lawyers argued that this put him at greater risk than other prisoners, as they pleaded with Jones to spare him prison.
‘unprecedented’
Zhao’s lawyers pointed to cases involving similar banking law violations that resulted in probation, such as the prosecution of executives of crypto platform Bitmex. But Jones said this particular crime was “unprecedented” because it involved millions of dollars and illicit actors including terrorists and hackers transferred funds to Binance.
Zhao pleaded guilty in November to failing to implement an adequate money laundering program at Binance, an exchange that launched in Shanghai in 2017 and has grown to process trillions of dollars worth of trades each year. At the same time, Binance pleaded guilty to violating anti-money laundering and sanctions laws and agreed to pay $4.3 billion to resolve the investigation with the Justice Department and other US regulators.
Zhao, who moved to Canada from China at the age of 12 and later settled in Dubai, has since been barred from leaving the US. Addressing the judge on Tuesday, he expressed remorse and said he had traveled to Seattle to plead guilty last November rather than remain at his home in the United Arab Emirates, which does not have an extradition treaty with the US.
“I left my family and came to America to take responsibility for my actions,” Zhao said. “That’s because responsibility is a core value to me, and I live by that.” He described life outside of crypto, focusing on a philanthropic education project.
regulator ‘oops’
While federal sentencing guidelines called for a prison sentence of up to 18 months, the US government insisted on a longer sentence. Federal prosecutor Kevin Mosley said the violation of US law by the Binance founder was intentional, not an omission.
“It was not a mistake,” Mosley said. “It was not a regulatory ‘oops’.” But he also said the punishment the US sought was proportionate. Mosley said the government is not saying Zhao’s crimes amount to Bankman-Fried and that it is not “trying to kill the cryptocurrency industry.”
He focused on a phrase used by Zhao years earlier: “It is better to ask for forgiveness than permission.”
Mosley argued that by not asking for permission, Zhao made his company great and achieved fame, becoming a crypto celebrity while bypassing US compliance laws. Failure to maintain an adequate money laundering program opened the door for business to illicit actors including crypto mixers, hackers, and terrorist groups including al-Qaeda and ISIS. Bitcoin On the stage.
terrorist group
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 funds for the Palestinian resistance. Hamas, which is designated as a terrorist organization by the US, killed more than 1,200 Israelis on October 7.
The lack of proper compliance led some customers to do business with residents of Iran in violation of US sanctions. According to the government memo, between 2018 and 2022, Binance processed at least 1.1 million transactions that violated US sanctions, worth about $898 million.
While Zhao stepped down as CEO as part of his plea agreement with the government, he continued to own the company and “will make a nice profit,” Mosley said, arguing that the fine alone was insufficient. .
The judge said he was also troubled by the ‘it is better to apologize than permission’ statement, pointing out the irony of Zhao now appearing before him to apologise.
Zhao’s attorney Mark Bartlett said he couldn’t think of anything else a person could do to show his remorse.
“Did he make mistakes? Of course, that’s why we’re here,” Bartlett said.
Some of this was financially motivated, he said, but Zhao got into crypto “to change the world.”
Despite Zhao’s well-publicized criminal case, he has remained in control of his personal fortune. According to the Bloomberg Billionaires Index, his wealth increased by $25 billion last year due to the recovery in the crypto industry and he is currently ranked as the 42nd richest person in the world.
