Changpeng Zhao, the billionaire founder of Binance, a giant cryptocurrency exchange, was sentenced to four months in prison for a money-laundering violation that allowed terrorist groups and criminals to access the platform. This sentence was much lighter than what other crypto executives have faced in similar cases. Despite prosecutors requesting a three-year sentence, Judge Richard A. Jones felt Mr. Zhao had taken responsibility for his offenses and was unlikely to reoffend. This led to the lighter penalty.
Mr. Zhao, who had previously been dismissive of legal concerns about Binance, was negotiating with federal prosecutors while also becoming a dominant figure in the crypto industry after helping bring down his business rival, Sam Bankman-Fried, who had been sentenced to 25 years in prison for fraud earlier in the year. Behind the scenes, Mr. Zhao was negotiating with prosecutors to avoid his own legal issues. Binance settled charges by paying $4.3 billion to U.S. agencies for allowing terrorist organizations and criminals to misuse the platform.
Despite admitting his failures in establishing an adequate anti-money-laundering system at Binance and resigning as the company’s CEO, Mr. Zhao retained his ownership stake and $33 billion fortune. Prosecutors argued that his crimes warranted a three-year sentence for violating U.S. law on an unprecedented scale, but defense lawyers argued for probation, stating Mr. Zhao had shown remorse and accepted responsibility. Ultimately, Judge Jones agreed that the three-year recommendation was too harsh.
Mr. Zhao’s family, including his son, mother, and sister, attended the sentencing hearing where defense lawyers argued against the suggested sentence. Mr. Zhao has remained in the United States since his guilty plea and has been traveling across the country while laying the groundwork for his next ventures. He has networking with entrepreneurs, launched an online education platform called Giggle Academy, and shown interest in investing in biotechnology start-ups. Through his continued ownership of Binance, he remains poised to benefit from the growth of the crypto industry.
The sentencing of Mr. Zhao contrasts sharply with the penalties faced by other crypto executives involved in criminal activities, such as Do Kwon and Alex Mashinsky, facing fraud charges and decades in prison. Dennis Kelleher of Better Markets criticized the light sentence as sending the wrong message to criminals worldwide. Despite facing legal issues and criticism, Mr. Zhao has shown remorse for his failures and has taken steps to make amends while continuing to explore opportunities in various industries.
