Synopsis: Changpeng Zhao, founder of the world’s largest crypto exchange Binance pleaded guilty to allowing criminals to launder money on his platform and has been sentenced to four months in prison.
Changpeng Zhao (CZ), has been sentenced to 4 months in prison in the US for allowing criminals to launder money on Binance, his crypto exchange platform. The founder of the world’s largest crypto exchange platform pleaded guilty in November 2023 and resigned from the company. Binance was ordered to pay $4.3 Billion (£3.4 Billion) after US investigating agencies discovered Binance helped users bypass US sanctions amounting to billions of dollars.
CZ Binance Pleaded Guilty to Money Laundering Violations
After Changpeng Zhao pleaded guilty to the money laundering charges, Judge Richard Jones said Zhao put “Binance’s growth and profits over compliance with US laws and regulations”. CZ’s “willful violations” had threatened the US financial system and national security, leading to US prosecutors seeking a three-year sentence for the former owner.
US Treasury Secretary Janet Yellen said, “Binance turned a blind eye to its legal obligations in the pursuit of profit. Its wilful failures allowed money to flow to terrorists, cybercriminals, and child abusers through its platform.”
Judge Rejects Harsher Sentence for CZ
The US Justice Department’s investigation into the crypto exchange also found the exchange made it easy for criminals to move money. The department’s request for 3-year jail term was denied by the judges, which awarded a 4-month prison term instead. This decision has been speculated on CZ paying the $ 4.3 billion as fines and accepting the crime. The bench found Changpeng Zhao’s (CZ) unwillingness to prevent the crime as the main factor in the punishment given to former CEO.
Impact on the Crypto Industry
As of May 1, 2024, there’s no definitive sign of a full-blown crash. However, some analysts believe it could enter a bear market if the price continues to drop significantly. In other developments, Nigerian authorities are also investigating the company located in the Cayman Islands for potential violations. However, Tigran Gambarayan, the person in charge of financial crime compliance at the crypto exchange, refuted the charges in a Nigerian court in early April.
Apart from CZ, another famous person who has landed in trouble is Sam Bankman-Fried (sentenced to 25 years in prison for fraud at FTX, stealing billions from its customers before the firm’s failure).
Market Analysts are hoping that an early release CZ will send the crypto market on an uptrend from the recent slump of the Bitcoin crash. Meanwhile, Binance has appointed Richard Teng as its new CEO, to keep the crypto exchange going forward. The native coin BNB might see short-term volatility, but long-term impact depends on how Binance regains user trust.
Changpeng Zhao (CZ) Stand on the Verdict
Changpeng Zhao with a current fortune of $33 billion according to Forbes, tweeted on X (formerly Twitter):
“I would like to thank everyone for your care and support, be it writing letters, showing support on X, or in any other form. They all mean a lot to me and keep me strong. I will do my time, conclude this phase and focus on the next chapter of my life (education). I will remain a passive investor (and holder) in crypto. Our industry has entered a new phase. Compliance is super important. A silver lining of this whole process is that Binance has been under the microscope. And funds are SAFU. Protect users!”
We wish all the best to CZ for the tough times ahead and support him in earnest. Thanks! for reading this article. To know more about “Binance India Launch: Hope or Hype?“
