Binance founder Changpeng Zhao sentenced to 4 months for allowing money laundering

Apr 29, 2024, 9:25 PM | Updated: Apr 30, 2024, 5:26 pm

SEATTLE (AP) — Changpeng Zhao, founder of the world’s largest cryptocurrency exchange, was sentenced Tuesday to four months in prison for looking the other way as criminals used the platform to move money connected to child sex abuse, drug trafficking and terrorism.

U.S. District Judge Richard A. Jones credited the founder and former CEO of Binance for taking responsibility for his wrongdoing. Zhao, 47, pleaded guilty in November to one count of failing to maintain an anti-money-laundering program. Binance agreed to pay $4.3 billion to settle related allegations from the U.S. government.

“I failed here,” Zhao told the court Tuesday. “I deeply regret my failure, and I am sorry.”

But the judge said he was troubled by Zhao’s decision to ignore U.S. banking requirements that would have slowed the company’s explosive growth. “Better to ask for forgiveness than permission,” is what Zhao told his employees about the company’s approach to U.S. law, prosecutors said.

“No person — regardless of wealth — is immune from prosecution or above the laws of the United States,” Jones said.

The sentence, which included a previously agreed-to $50 million fine, was far less than the three years the Justice Department had sought, but defense attorneys had asked that Zhao spend no time in prison.

Zhao is the first person ever sentenced to prison time for such violations of the Bank Secrecy Act, which requires U.S. financial institutions to know who their customers are, to monitor transactions and to file reports of suspicious activity. Prosecutors said no one had ever violated the regulations to the extent Zhao did. If he did not receive time in custody for the offense, no one would, rendering the law toothless, they argued.

“This wasn’t a mistake,” Justice Department lawyer Kevin Mosley told Jones. “When Mr. Zhao violated the BSA he was well aware of the requirements.”

For example, Mosley said, Zhao directed the company to disguise customers’ locations in the U.S. in an effort to avoid having to comply with U.S. law.

The Justice Department on Monday sent a letter urging Congress to stiffen penalties in such cases. Violations can allow billions of dollars to flow illicitly through the U.S. financial system, but penalties under the government’s sentencing guidelines are “poorly calibrated to address the severity of the crimes,” the letter said.

Binance allowed more than 1.5 million virtual currency trades, totaling nearly $900 million, that violated U.S. sanctions, including ones involving Hamas’ al-Qassam Brigades, al-Qaeda and Iran, prosecutors have said.

Defense attorneys Mark Bartlett and William Burck told the judge there was no evidence Zhao knew of any specific transaction that would have been barred by U.S. regulations or sanctions. Also, they argued, Binance transactions that violated U.S. sanctions constituted a miniscule portion for a company that processed trillions of dollars per year. And they noted that Zhao began making changes to improve Binance’s compliance before stepping down.

In a letter to the court, Zhao wrote that there was “no excuse for my failure to establish the necessary compliance controls at Binance.”

“I wish I could change that part of Binance’s story,” he added. “But under my direction, Binance has now implemented the most stringent anti-money laundering controls of any non-U.S. exchange, and those controls have been in place since 2022.”

Zhao, his legal team and family members left after Tuesday’s hearing without speaking to reporters. Zhao will report to serve his sentence at a date yet to be determined.

The cryptocurrency industry has been marred by scandals and market meltdowns.

Zhao was perhaps best known as the chief rival to Sam Bankman-Fried, the founder of FTX, which was the second-largest crypto exchange before it collapsed in 2022. Bankman-Fried was convicted last November of fraud for stealing at least $10 billion from customers and investors and sentenced to 25 years in prison.

Zhao and Bankman-Fried were originally friendly competitors in the industry, with Binance investing in FTX when Bankman-Fried launched the exchange in 2019. The relationship deteriorated, however, culminating in Zhao announcing that he was selling all of his cryptocurrency investments in FTX in early November 2022. FTX filed for bankruptcy a week later.

More recently, Nigeria has recently sought to try Binance and two of its executives on money laundering and tax evasion charges. The U.S. Justice Department on Tuesday charged early bitcoin investor Roger Ver, known as “bitcoin Jesus” for his avid promotion of the currency, with evading $50 million in taxes.

The judge described Zhao’s life story as remarkable: He grew up in rural China and his family immigrated to Canada following the 1989 Tiananmen Square massacre. He worked at a McDonald’s beginning at age 14 and eventually became enamored of the tech industry while in college.

He founded Binance in 2017, motivated at least in part by a desire to help people in underdeveloped countries access reliable banking. The company made him a crypto celebrity and a billionaire many times over; he announced in 2021 that he intends to give away nearly all of his fortune.

Zhao’s philanthropic interests include funding free online education programs for children across the globe and work by small research labs to cure diseases.

Zhao’s attorneys pointed to his willingness to leave the United Arab Emirates, where he and his family live, to enter his guilty plea in the U.S., even though the two countries don’t have an extradition treaty.

They also argued that he would not be safe in prison. Because he is not a U.S. citizen, he is ineligible for placement in a minimum security facility. Given his status and wealth, as well as Binance’s cooperation with U.S. law enforcement in certain investigations, he might be a target for violence in a medium security prison, they suggested.

United States News


KSL Podcasts/Ben Kuebrich

Under scrutiny: Carl Everett and the intricate FBI investigation

Episode 2 of "Ransom: Position of Trust" examines early suspects in the Carl Everett case. Listen now on your favorite podcast app.

3 hours ago

Associated Press

Hamas rocket attack from Gaza sets off air raid sirens in Tel Aviv for the first time in months

DEIR AL-BALAH, Gaza Strip (AP) — Hamas fired a barrage of rockets from Gaza that set off air raid sirens as far away as Tel Aviv for the first time in months on Sunday in a show of resilience more than seven months into Israel’s massive air, sea and ground offensive. There were no immediate […]

6 hours ago

Associated Press

3 falcon chicks hatch atop the Verrazzano-Narrows Bridge in New York City

NEW YORK (AP) — Three peregrine falcon chicks have hatched in a nest built at the top of the Verrazzano-Narrows Bridge in New York City, officials said. The Metropolitan Transportation Authority Bridges and Tunnels said Friday that the chicks hatched in a nesting box set up by the agency atop a 693-foot-tall (211-meter-tall) tower on […]

17 hours ago

Associated Press

Baltimore police fatally shoot a man who pulls gun during questioning; detective injured

BALTIMORE (AP) — Police officers in Baltimore fatally shot a man who pulled a gun while they questioned him in a different shooting, authorities said. A detective was shot in the chest, and his protective vest likely saved his life, Police Commissioner Richard Worley told reporters. Police were on the city’s south side investigating a […]

19 hours ago

Associated Press

California teenager arrested after crowd pounded and kicked a deputy’s car

HIGHLAND, Calif. (AP) — A teenager was taken into custody after a crowd of young people swarmed a deputy’s patrol car earlier this month, kicking and punching the vehicle before the deputy could drive away, a California sheriff’s office said this week. The 15-year-old male allegedly opened the driver’s door of the San Bernardino Sheriff’s […]

19 hours ago

Travelers walk through Salt Lake City International Airport Friday, May 24, 2024, in Salt Lake City...

Associated Press

Record broken for most travelers screened at US airports on Friday, according to TSA

A record was broken ahead of the Memorial Day weekend for the number of airline travelers screened at U.S. airports.

21 hours ago

Sponsored Articles


Day & Night Air Conditioning, Heating and Plumbing

Beat the heat, ensure your AC unit is summer-ready

With temperatures starting to rise across the Valley, now is a great time to be sure your AC unit is ready to withstand the sweltering summer heat.



Here are 5 things Arizona residents need to know about their HVAC system

It's warming back up in the Valley, which means it's time to think about your air conditioning system's preparedness for summer.


Midwestern University

Midwestern University Clinics: transforming health care in the valley

Midwestern University, long a fixture of comprehensive health care education in the West Valley, is also a recognized leader in community health care.

Binance founder Changpeng Zhao sentenced to 4 months for allowing money laundering