According to foreign media news, on April 30, local time, Changpeng Zhao, the founder of Binance, the world's largest cryptocurrency exchange, was sentenced to 4 months in prison in the United States.
Previously, U.S. prosecutors said in a court document on April 23 local time that Changpeng Zhao should serve 36 months in prison after admitting to violating anti-money laundering laws. Changpeng Zhao stepped down as Binance's chief executive in November, when he pleaded guilty to violations and the company agreed to accept a $4.32 billion fine.
As of press time, Bitcoin hit $60,000 per coin, up 0.28% on the day.
Changpeng Zhao was sentenced to four months in prison for money laundering
On Tuesday local time, Binance's billionaire founder Changpeng Zhao was sentenced to four months in prison for alleged money laundering on his cryptocurrency exchange. U.S. District Judge Richard Jones told Changpeng Zhao in federal court in Seattle: "You would have had the ability, the financial resources, and the manpower to make sure that every rule was followed, but you missed this opportunity." ”
The sentence of the former Binance chief is well below the three-year sentence sought by federal prosecutors. The defence had asked for a five-month suspended sentence. According to the sentencing guidelines, his sentence should be between 12 and 18 months.
According to foreign media reports, Changpeng Zhao said to the judge before the verdict was announced: "I'm sorry. Changpeng Zhao reportedly said in court earlier Tuesday: "I think the first step to taking responsibility is to fully recognize your mistakes." Here, I have failed to implement an adequate anti-money laundering procedure...... I now realize the gravity of this mistake. ”
In November, Changpeng Zhao struck a deal with the U.S. government to settle a multi-year investigation into Binance, the world's largest cryptocurrency exchange. As part of the settlement, Changpeng Zhao resigned as the company's chief executive.
Changpeng Zhao is accused of deliberately failing to implement an effective anti-money laundering program as required by the Bank Secrecy Act and allowing Binance to process transactions involving the proceeds of illegal activities, including between U.S. persons and individuals in sanctioned jurisdictions.
The U.S. ordered Binance to pay $4.3 billion in fines and forfeitures. Changpeng Zhao agreed to pay a $50 million fine. The U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission have filed lawsuits against Binance for allegedly mishandling customer assets and operating an illegal, unregistered exchange in the United States.
On November 21, 2023 local time, in Seattle, USA, Changpeng Zhao left the Seattle courthouse. Image source: Visual China
The prosecution of Binance and its founders was conducted jointly by the U.S. Department of Justice, the Commodity Futures Trading Commission, and the Treasury Department, although it is worth noting that the SEC was not involved.
According to foreign media reports, a Binance spokesperson said in an interview with reporters that the cryptocurrency exchange "is proud of the culture of compliance, security, and transparency that has been created over the past few years and looks forward to building on this culture." The spokesperson said the company had made "significant compliance enhancements," including in anti-money laundering testing and "recruitment of key compliance personnel."
Mr. Zhao's lawyer did not immediately respond to a request for comment. Prosecutors said Changpeng Zhao violated U.S. law on an "unprecedented scale" and that he showed "willful disregard" for Binance's legal liability.
Compared to former crypto rival Sam Bankman-Fried, founder and former CEO of FTX, Changpeng Zhao is in a much easier position. Bankman-Fried was sentenced to 25 years in prison for crimes related to the operation of his cryptocurrency exchange. Unlike Changpeng Zhao and the accusations against Binance, Bankman-Fried's bankrupt exchange faces allegations of fraud and misuse of customer funds.
Braden Perry, a former senior trial lawyer at the Commodity Futures Trading Commission, said such conduct was often seen as more deceptive than a mere failure to comply and caused financial harm to a wider range of people. "CZ's case appears to focus on regulatory and compliance deficiencies, while SBF's case relies on direct financial misconduct and fraud," Perry continued. "While the lack of compliance is serious, it may be seen as a lack of oversight rather than active malfeasance. ”
"Changpeng Zhao's wealth may not be affected after he is imprisoned"
According to foreign media reports, in November last year, Changpeng Zhao reached an agreement with the U.S. government to end a multi-year investigation into Binance. Changpeng Zhao stepped down as the company's CEO as part of Binance's $4.3 billion settlement with the U.S. Department of Justice, and the exchange agreed to form a board of independent members, as well as a compliance and audit committee. Three of the seven directors on the recently formed board were designated as "independent" directors, and five of them, including all independent directors, submitted letters requesting lenient sentences to the judge hearing Changpeng Zhao's criminal case.
Gabriel Abed, chairman of the board and independent director, told U.S. District Judge Richard Jones that Changpeng Zhao was "known for his stoic composure and true humility" and that "despite his remarkable achievements," he maintained a modest lifestyle, including wearing clothes he bought on Amazon, driving a Toyota, and wearing an Apple Watch. Although Changpeng Zhao now faces a prison sentence, industry experts and lawyers who spoke to reporters say his vast personal wealth will not be affected and is likely to increase.
Trey Lovell, a Los Angeles-based corporate lawyer, told reporters that the government is only entitled to any damages or fines imposed, but not to all of Changpeng's assets or wealth.
Changpeng Zhao was born in Lianyungang, Jiangsu Province in 1977, and at the age of 12, he moved to Vancouver, Canada, with his family, and became a Chinese Canadian. During his college years, he studied computer science at McGill University in Montreal.
In 1997, after graduating from university, Changpeng Zhao entered the fintech industry, first as a software developer at the Tokyo Stock Exchange, and then moved to New York to work for Bloomberg, where he participated in the development of futures trading software, and at the age of 27, Changpeng Zhao, known as a programming wizard, became the company's team leader in New Jersey, London and Tokyo.
In 2005, Changpeng Zhao successively founded Fusion Information (the fastest high-frequency trading system developed for brokers) and Bjet Technology in Shanghai, and earned the first pot of gold. In 2013, he learned about Bitcoin from a poker friend and began to venture into the space. In 2017, Changpeng Zhao and his team founded Binance and issued the digital currency "Binance Coin" (BNB).
Binance's name is based on a combination of binary and finance, and offers trading in more than 150 cryptocurrencies, including Bitcoin, Ethereum, Litecoin, and its BNB token. From September to December 2017, the price of Bitcoin soared, from $3,000 to $20,000, and people began to scramble to enter cryptocurrency exchanges.
Just half a year after its establishment, Binance attracted 6 million users with a trading capacity of 1.4 million transactions per second, with a daily trading volume of more than $10 billion, soaring to the first place in the industry in one fell swoop, becoming the world's largest cryptocurrency exchange, and also creating a new myth in the cryptocurrency industry. In the first quarter of 2018, Binance made a profit of $200 million.
By 2021, Binance had 3,000 employees worldwide and a daily trading volume of $76 billion, more than its four biggest competitors combined. At that time, Binance was valued at $300 billion. Binance is not publicly listed and does not directly disclose the company's profits. However, at that time, some media estimated that in the third quarter of 2021 alone, the company's profit reached 3.2 billion US dollars, equivalent to 20.3 billion yuan.
It is reported that Changpeng Zhao controls a majority stake in Binance. According to Forbes, founder Changpeng Zhao owns 30% of Binance shares. At the end of 2021, against the backdrop of the sharp rise in cryptocurrencies such as Bitcoin, Changpeng Zhao became the richest man in China with a net worth of 94.1 billion US dollars (about 634.8 billion yuan), and also ranked among the top ten richest people in the world. However, half a year later, virtual currencies such as Bitcoin plummeted, and Changpeng Zhao's wealth once shrank by more than 80% to $17.4 billion.
In 2023, Changpeng Zhao's fortune grew by $25 billion as the price of Bitcoin recovered, more than five times the $4.32 billion fine that Binance agreed to pay to U.S. authorities, and his wealth came mainly from a controlling stake in Binance, which he founded.
Source: National Business Daily K25