A federal judge has sentenced former Binance CEO Changpeng “CZ” Zhao to four months in prison for violating U.S. money laundering laws.

In an April 30 hearing in U.S. District Court for the Western District of Washington, Judge Richard Jones sentenced Zhao to four months in prison. Prosecutors had recommended the former Binance CEO serve three years for his failure to maintain an effective Anti-Money Laundering (AML) program while at the crypto exchange, to which he pleaded guilty in November. CZ’s lawyers requested he be given probation.

According to reports from the courtroom, Judge Jones said there was no evidence Zhao “was ever informed” of specific illegal activities at Binance, pushing back against prosecutors’ request to enhance the sentence from 18 months to three years. In final arguments, attorneys for the government suggested that CZ’s approach at Binance had been to ask for forgiveness rather than permission, and he shouldn’t be allowed to profit from his actions.

“Incarceration is necessary to reflect the seriousness of the offense,” said Kevin Mosley for the prosecution, later adding: “A probationary sentence here will incentivize others to break the law and to do it in the largest scale possible.”

Attorneys for Zhao referenced information in documents presented to the court but sealed to the public as a “compelling factor” for the judge to consider at sentencing. His legal team argued that Judge Jones could impose probation for less than six months, claiming Zhao’s wealth could make him a target in prison.

Before being sentenced, CZ apologized for his actions and said he “had a lot of quiet time alone to think and reflect.” He added he accepted responsibility for Binance’s failure to implement an effective AML program. Following Judge Jones' decision, Zhao said he would present himself at a date to be determined to report to prison.

The hearing had initially been pushed back from February, having it follow sentencing for former FTX CEO Sam Bankman-Fried , who was found guilty of seven felony charges in November. A judge sentenced Bankman-Fried to 25 years in prison, but his lawyers have filed a notice of appeal for both the conviction and sentence.

Many attending CZ’s hearing suggested that the event wasn’t as high-profile as Bankman-Fried’s trial or sentencing, which attracted long lines outside the New York City courthouse. Attorneys for the Justice Department also pushed back against comparing the two crypto figures, adding that the crimes were not about their personalities.

Ex-Binance CEO Changpeng Zhao sentenced to four months in prison image 0 Source: Changpeng Zhao

Zhao resigned as Binance CEO and pleaded guilty to the felony charge as part of a settlement with U.S. authorities, in which the crypto exchange agreed to pay $4.3 billion for “civil regulatory enforcement actions.” The deal did not affect an ongoing civil suit with Binance, Binance.US and CZ filed by the U.S. Securities and Exchange Commission in June 2023.

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After resigning as CEO in November, CZ said he planned to “stay off Twitter” and has not publicly commented on the criminal case. In March, he launched Giggle Academy, an educational project related to crypto and blockchain for young people. Richard Teng, Binance’s former head of regional markets, became CEO after Zhao’s departure.

Alex Mashinsky will be one of the next significant figures in the crypto space to face charges after Bankman-Fried and Zhao. The former Celsius CEO’s criminal trial in the United States is scheduled to begin in January 2025.

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