Binance founder Changpeng Zhao has been sentenced to four months in prison for breaking US anti-money laundering laws.
A judge credited Zhao for taking responsibility for his wrongdoing but said he was troubled by the now-former CEO’s decision to ignore U.S. banking requirements that would have slowed the company’s explosive growth.
The sentence was far less than the three years prosecutors had sought, but defense attorneys had asked that Zhao spend no time in prison.
“Despite wealth, power or status, no person — regardless of wealth — is immune from prosecution or above the laws of the United States,” U.S. District Judge Richard A. Jones told Zhao.
Zhao pleaded guilty in November to one count of failing to maintain an anti-money-laundering program and stepped down as Binance agreed to pay $4.3 billion to settle related allegations. U.S. officials said Zhao deliberately looked the other way as people conducted transactions that supported child sex abuse, the illegal drug trade and terrorism.
“I failed here,” Zhao told the court Tuesday. “I deeply regret my failure, and I am sorry.”
No one has ever been sentenced to prison time for similar violations of the Bank Secrecy Act, defense attorneys Mark Bartlett and William Burck told the judge. But prosecutors argued that if Zhao did not receive time in custody for the offense, no one would, rendering the law toothless.
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.
Bartlett and Burck said there was no evidence Zhao personally knew of any specific transaction that would have been barred by U.S. regulations or sanctions. Also, they argued, the number of suspicious transactions Binance handled was a miniscule proportion for a company whose total transactions were about $500 million a day. And they noted that Zhao began making changes to make Binance a model of compliance with banking transparency regulations 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. 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,” he added.
Prosecutors said no one had ever violated the Bank Secrecy Act to the extent Zhao did.
“He says in hindsight he should have done a better job,” Justice Department lawyer Kevin Mosley told Jones. “This wasn’t a mistake. When Mr. Zhao violated the BSA he was well aware of the requirements.”
