Former Binance CEO Changpeng Zhao was sentenced Tuesday to four months in prison for allowing rampant money laundering on the world's largest cryptocurrency exchange. Zhao pleaded guilty in November to one count of failing to take required anti-money-laundering measures and stepped down as Binance agreed to pay $4.3 billion to settle related allegations. US officials said Zhao deliberately looked the other way as people conducted transactions that supported child sex abuse, the illegal drug trade, and terrorism. "I failed here," Zhao said before US District Judge Richard A. Jones issued the sentence. "I deeply regret my failure, and I am sorry."
The three-year prison term prosecutors sought was more than twice the guideline range for the crime, the AP reports. If he didn't receive time in custody for the offense, no one would, rendering the law toothless, they argued. Binance allowed more than 1.5 million virtual currency trades, totaling nearly $900 million, that violated US sanctions, including ones involving Hamas' al-Qassam Brigades, al-Qaeda, and Iran. "He made a business decision that violating US law was the best way to attract users, build his company, and line his pockets," the Justice Department wrote in a sentencing memorandum filed last week.
Zhao's lawyers insisted he should receive no prison time at all, citing his willingness to come from the United Arab Emirates, where he and his family live, to the US to plead guilty, despite the UAE's lack of an extradition treaty with the US. Defense attorneys said Zhao began making changes to make Binance a model of compliance with banking transparency regulations before stepping down. Zhao was perhaps best known as the chief rival to Sam Bankman-Fried, founder of FTX, which was the second-largest crypto exchange before it collapsed in 2022.
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