Former Binance CEO Changpeng Zhao has been sentenced to four months in a US prison today.
The sentence comes as a surprise to some, as bettors on Polymarket were expecting a six-month sentence.
Zhao will now serve his sentence in a US prison, which is notably lower than the 36 months sought by the Department of Justice.
His team had sought only five months of probation. Additionally, Zhao is required to pay a $50 million fine, as outlined in his guilty plea from November.
Prosecutors had requested a high sentence, double the 18 months at the upper end of the guidelines, aiming to match the “gravity” of Zhao’s crimes, according to the government’s sentencing memo last week.
During the hearing, prosecutors argued that if Mr. Zhao avoids incarceration despite knowingly and purposefully planning to violate U.S. law in order to establish the world’s largest cryptocurrency exchange and profit from it, then no one will face imprisonment, effectively rendering the Bank Secrecy Act (BSA) obsolete. This was reported by CoinDesk’s Nikhilesh.
Zhao’s sentencing follows closely after former FTX CEO Sam Bankman-Fried received his own legal judgment.
In contrast to Zhao, Bankman-Fried did not reach a deal with the government and was instead convicted of fraud by a New York jury at the end of last year.
He is currently serving a 25-year sentence, significantly longer than the former Binance CEO.
As part of his plea deal, Bankman-Fried agreed not to contest a sentence of 18 months.
While this concludes the Department of Justice’s actions against Zhao and Binance, both still face charges from the Securities and Exchange Commission (SEC). Interestingly, the SEC was not involved in the DOJ’s settlement.
The agreement included the Commodity Futures Trading Commission, Treasury’s Financial Crimes Enforcement Network, and Office of Foreign Assets Control.
Zhao’s sentencing follows closely after former FTX CEO Sam Bankman-Fried received his own legal judgment. In contrast to Zhao, Bankman-Fried did not reach a deal with the government and was instead convicted of fraud by a New York jury at the end of last year.
He is currently serving a 25-year sentence, significantly longer than the former Binance CEO. As part of his plea deal, Bankman-Fried agreed not to contest a sentence of 18 months.
While this concludes the Department of Justice’s actions against Zhao and Binance, both still face charges from the Securities and Exchange Commission (SEC).
Interestingly, the SEC was not involved in the DOJ’s settlement. The agreement included the Commodity Futures Trading Commission, Treasury’s Financial Crimes Enforcement Network, and Office of Foreign Assets Control.
Zhao’s incarceration stemmed from his guilty plea as part of the multibillion-dollar settlement between the government and Binance at the close of last year.
The agreement’s staggering $4 billion price tag surprised many, despite reports of the ongoing investigation into the cryptocurrency exchange over several years.
Before the judge’s ruling, Zhao received 161 letters of support from family and friends, appealing for leniency. In his letter to the judge, Zhao admitted there was “no excuse” for the absence of anti-money
laundering and compliance controls at Binance. He expressed regret, wishing he could alter that aspect of Binance’s history.
Since late last year, Zhao has been residing on US soil as mandated by the court.
Not a US citizen, Zhao resides with his family in the United Arab Emirates—a point his legal team raised to advocate for leniency.
They argued that Zhao cannot be sent to a minimum-security facility due to his non-US citizenship, a factor they urged the court to consider.
While the Tuesday hearing concludes the Department of Justice’s case against Binance and Zhao, enforcement actions within the Web3 space persist.
Just last week, the Justice Department arrested the founders of Samourai Wallet, accusing it of serving as a mixer for criminal funds.
Additionally, the DOJ has ongoing cases against Roman Semenov and Roman Storm, founders of Tornado Cash.
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