Former crypto kingpin Changpeng Zhao, founder of Binance, may be facing a 36-month prison sentence after pleading guilty to money laundering charges. US prosecutors have recommended a sentence above the guidance, citing the gravity of his crimes. This comes as Zhao’s rival, FTX fraudster Sam Bankman-Fried, was handed a 25-year sentence.
According to US authorities, Binance and Zhao failed to report over 100,000 suspicious transactions involving designated terrorist groups such as Hamas, al Qaeda, and ISIS. Prosecutors described Binance’s operations under Zhao’s rule as the “Wild West,” accusing the company of violating US laws on an unprecedented scale and showing deliberate disregard for legal responsibilities. They also revealed that Binance’s platform supported the sale of child sexual abuse materials and received a significant portion of ransomware proceeds.
In their sentencing memo, prosecutors argued that a custodial sentence of 36 months, twice the high end of the guidelines range, would reflect the seriousness of the offense, promote respect for the law, and serve as an adequate deterrent. They emphasized that Zhao had bet on not getting caught and believed the consequences would be less severe than the crime itself. However, now that he has been caught, the court will determine the appropriate punishment.
Zhao, who is also a Canadian citizen, has been free on a $175 million bond but was barred from leaving the United States. He is scheduled to be sentenced on April 30 in Seattle. Last November, Zhao stepped down as Binance’s chief after admitting to the violations, and the company agreed to pay a penalty of $4.32 billion. Zhao himself agreed to pay $50 million and cease his involvement with Binance.
Known as “CZ” in crypto circles, Zhao played a significant role in the collapse of FTX. Binance was reportedly in talks to acquire FTX before its sudden implosion in November 2022. Bankman-Fried, the founder of FTX, was found to have misappropriated user funds, leading to a $6 billion run on the crypto exchange as customers rushed to withdraw their deposits.
