May 24, 2024
Gulf
Business

Binance founder receives four-month prison term in landmark case

Changpeng Zhao, the founder of the world’s leading cryptocurrency exchange, Binance, has been sentenced to four months in prison on Tuesday after admitting to money laundering charges. The sentence was handed down in a US federal court in Seattle, marking a significant development in a case that has drawn global attention.

Binance founder receives four-month prison term in landmark case

Prior to the sentencing hearing, Zhao, often referred to as CZ, expressed remorse for his actions as CEO of Binance, which he founded in 2017. In a letter addressed to the judge, he acknowledged the gravity of his mistakes, stating, “Words cannot explain how deeply I regret my choices that result in me being before the Court. Rest assured that it will never happen again.”

The sentencing comes after Binance agreed to pay over $4 billion in fines and penalties last fall as part of a settlement with the US government. The company admitted to engaging in anti-money laundering activities, unlicensed money transmitting, and sanctions violations. Zhao, aged 47 with a personal fortune nearing $40 billion, according to Bloomberg, also agreed to step down as CEO and pay a $200 million fine.

US authorities launched a multiyear investigation into Binance, alleging that the platform facilitated transactions linked to various illegal activities, including child sex abuse, narcotics, and terrorist financing. Court documents revealed a lack of protocols to flag or report money-laundering risks, with one compliance staffer lamenting, “We need a banner ‘is washing drug money too hard these days – come to binance we got cake for you.’”

Zhao’s sentencing follows that of his former rival, Sam Bankman-Fried, who was sentenced to 25 years in federal prison for his involvement in a multibillion-dollar fraud through FTX, the second-largest crypto exchange before its sudden collapse in 2022. These consecutive sentences highlight a tougher stance taken by the Department of Justice against financial crimes, particularly within the cryptocurrency sector.

Despite efforts by crypto investors and businesses to shift the industry towards mainstream acceptance, skeptics argue that more needs to be done to address its association with criminal activity. Critics have voiced concerns over the perceived leniency of Zhao’s sentence, with some suggesting that the DOJ’s actions send the message that “crime pays.” Dennis Kelleher, CEO of the nonprofit Better Markets, remarked, “It didn’t even charge CZ with money laundering; he was only charged with not having an anti-money laundering program. That’s less than a slap on the wrist.”