Over the past weekend, Changpeng Zhao, the former figurehead of Binance, has initiated his brief four-month incarceration period. Sources confirm via CZ’s legal representatives at Latham & Watkins to CNBC that he is stationed at a modest prison in Lompoc, California.
Following a guilty plea on April 30 for money laundering offenses, CZ was free on bail until late May . From the original three-year stretch federal prosecutors aimed for, he will only serve four months. His defense appealed for just five months of probation, although guidelines stipulated a 12 to 18-month stint.
CZ is in The Can
Both Binance and CZ had been under the microscope of the Department of Justice (DOJ) and the Commodity Futures Trading Commission (CFTC) for quite some time. In November 2023, a significant shift occurred when CZ pleaded guilty to breaching the Bank Secrecy Act (BSA) by not upholding a robust anti-money laundering framework at Binance.
On the corporate side, the DOJ highlighted that Binance confessed to plotting to violate the BSA, failing to register as a legitimate financial intermediary, and breaching the International Emergency Economic Powers Act (IEEPA).
CZ expressed his remorse to U.S. District Judge Richard Jones ahead of his sentencing, as reported by Reuters. 'Acknowledging mistakes is the cornerstone of accountability. I failed to ensure a proper anti-money laundering system. … I now grasp the gravity of that failure.'
Prior to his sentencing, CZ had relinquished his role as CEO, aligning with a settlement deal with the U.S. authorities, wrapping up a lengthy probe into Binance. Despite stepping back, Zhao is still reported to hold a controlling share, around 90%, in Binance.
A Light Sentence
The indictment against his exchange, Binance, detailed it as neglecting its duty to curb money laundering activities, thereby facilitating illicit transactions involving Americans and nations under sanctions. Binance had to pay a massive fine of $4.3 billion, while CZ personally settled with a $50 million fine. Nevertheless, Bloomberg still ranks him among the elite global billionaires.
Even while serving his time, CZ has ambitions to re-enter the crypto sphere, holding onto his assets and continuing with passive investments post-release.
Upon hearing that Binance’s top figure has commenced his time behind bars, the digital currency world has shown their backing for CZ. Many consider his imprisonment as a shield for Binance.
A comment from a Reddit user highlighted CZ's intervention as a safeguard against a financial catastrophe on the scale of FTX. Binance, as the reigning largest crypto exchange, boasts a far superior user base and processes significantly more transactions than FTX. If it were to falter, the consequences could potentially eclipse the FTX debacle.
Sam Bankman-Fried, the mastermind and ex-leader of FTX, faced a 25-year sentence in the United States. This November, he was found guilty on every count linked to the securities fraud scandal that led to the collapse of FTX and its affiliated hedge fund, Alameda Research.
Within his March sentencing requirements, Bankman-Fried was mandated to give up $11 billion.
In stark contrast to CZ, Bankman-Fried, the driving force behind FTX, did not manage to secure an agreement with legal authorities.
Conversely, his executive peers, notably Caroline Ellison, formerly leading Alameda Research and his past girlfriend, joined forces with prosecutors, proving pivotal in the proceedings against him.
Earlier this month, Ryan Salame, another ex-FTX leader, has been handed a 7.5-year sentence . As per judicial orders, Ryan is subjected to an additional 3 years under supervision and has liabilities amounting to more than $6 million in seized assets and $5 million as restitution.
Last September, he conceded to charges pressed by the U.S. government, including illicit fund transfers and unauthorized financial operations. political donations Nicholas Say, originally from Ann Arbor, Michigan, has journeyed far and wide, with an extended stay in Uruguay, now living in the Far East. His writings, prominently focused on authentic progress and futuristic human technology, are spread across the internet.
