Binance founder and former CEO Changpeng Zhao was sentenced Tuesday to four months in prison for violating anti-money laundering laws while at the helm of the world’s largest cryptocurrency exchange.
Judge Richard Jones of the U.S. District Court for the Western District of Washington handed down the sentence five months after Zhao — long considered one of the most powerful and successful people in crypto — pleaded guilty to failing to maintain an effective AML program, in violation of the Bank Secrecy Act.
The Justice Department wanted Zhao locked up for three years and to pay a $50 million fine, according to a sentencing memo last week. Sentencing guidelines, by contrast, recommended 12 to 18 months.
Zhao’s legal team had suggested he instead serve five months of probation in Abu Dhabi, where his family lives, adding that “[n]o defendant in a remotely similar BSA case has ever” been sent to prison.
In court Tuesday, Jones said to Zhao, “Everything I see about your history and characteristics are of a mitigating nature and a positive nature,” according to The Verge reporter Elizabeth Lopatto, who was present in the courtroom.
Jones said the court recognizes that Zhao took “extraordinary steps and significant steps” to cooperate with the government, and that he doesn’t believe Zhao is likely to re-offend.
The scale of his offense, however, is “remarkable,” and the judge “wants to consider deterring future crime,” Lopatto reported.
Earlier in the hearing, prosecutor Kevin Mosley — addressing the possibility that Zhao receive no prison time, per the defense’s suggestion — told the judge, “If Mr. Zhao does not face incarceration after deliberately and willfully planning to violate U.S. law to build the largest crypto exchange in the world and get rich in the process … then no one will face incarceration and the BSA will for intents and purposes be a dead letter,” according to a post on social media site X from CoinDesk reporter Nikhilesh De, who was present in the courtroom.
Defense attorney William Burck, however, told the judge that sentencing Zhao to prison would “tell people not to come to the U.S. and accept responsibility for their crimes,” Lopatto reported.
Burck and Mark Bartlett, Zhao’s other defense attorney, leaned into Zhao’s cooperation with the government as a factor in consideration.
“He never minimized his conduct” and “admitted his mistake,” said Bartlett, according to Lopatto; and he returned to the U.S. voluntarily to plead guilty and face sentencing, rather than stay in the United Arab Emirates.
Zhao spoke at the hearing, too, noting, “The first step to taking responsibility is to fully recognize the mistakes.”
While he failed to set up a know-your-customer/AML program at Binance, he said he’s tried to rectify that and has directed the company he once led to cooperate with the government, De reported.
Zhao had already agreed to pay a $50 million fine. Binance, for its part, paid $4.3 billion in penalties when Zhao stepped down from the company in November. Richard Teng replaced him as CEO.
Zhao’s four-month sentence stands in contrast to the 25 years of prison time given to FTX founder Sam Bankman-Fried, another former crypto luminary whose trial wrapped up in March.
Defense attorneys have requested that Zhao be sent to SeaTac, a federal prison in Seattle.
