Binance Founder Changpeng ‘CZ’ Zhao Sentenced to 4 Months in Prison

Important points

  • Binance founder Changpeng Chao was sentenced to four months in prison for violating the Bank Secrecy Act during his time at the cryptocurrency exchange.
  • The Department of Justice (DOJ) asked for a three-year prison sentence, but CZ’s lawyers asked for probation instead.
  • CZ pleaded guilty to the Justice Department’s charges in November last year and resigned as Binance’s CEO.
  • This is just the latest in a long list of legal actions taken against entities in the crypto industry over the past few years, with Bitcoin wallet founders also arrested just last week.

Binance founder and former CEO Changpeng “CZ” Chao was sentenced to four months in prison in a Seattle court on Tuesday. AP report.

Last November, Mr. Zhao pleaded guilty to violating the Bank Secrecy Act and resigned as CEO of the world’s largest cryptocurrency exchange. The plea cost Binance about $4.3 billion and resulted in one of the largest corporate resolutions in history involving criminal charges against executives.

The U.S. Department of Justice (DOJ) had recommended a three-year prison term, but Zhao’s lawyers did not seek prison time, instead suggesting probation. According to Bloomberg, Zhao’s plea deal also includes a $50 million fine, which is only a fraction of his estimated net worth of just under $40 billion.

Prior to the verdict, prediction market Polymarket had given a 41% chance of a sentence of less than six months as the most likely outcome among the available options. The probability of a sentence of three years or more in prison, as proposed by the Ministry of Justice, was 6%.

Cryptocurrency enforcement activity gains momentum

The past few years have been dramatic in terms of legal actions taken against a wide range of individuals and companies in the crypto industry.

Recently, former FTX CEO Sam Bankman Fried was sentenced to 25 years in prison for fraud during his time at the exchange. Just last week, the founders of Samurai Wallet, a non-custodial, privacy-focused Bitcoin wallet, were arrested on money laundering charges.

The U.S. Securities and Exchange Commission (SEC) also has a number of ongoing cases related to the proliferation of unregistered securities offerings and exchanges in the cryptocurrency space, including the recent focus on Ethereum.

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