Cryptocurrency exchange Binance’s founder, Changpeng Zhao, is reported to have started his four-month prison term in California. This news was confirmed by his legal team from Latham and Watkins, according to CNBC.
EljaBoom, a prominent blockchain influencer and crypto investor, also shared the update on social media platform X. Referring to Zhao as a “friend,” Boom stated he had started his sentence in a low-security federal prison located in Lompoc, California. Boom elaborated, explaining that “low security” facilities offer inmates more freedom as they are considered low-risk and unlikely to escape.
Better known in the crypto world as “CZ,” Zhao received a four-month prison sentence in April. This followed his guilty plea to charges that Binance, the cryptocurrency exchange he founded, had violated US anti-money laundering laws.
Following his guilty plea, US authorities pressured Zhao to resign from his position as CEO of Binance. Under his leadership, Binance had ballooned into one of the world’s leading cryptocurrency exchanges by trading volume.
However, prosecutors alleged that this growth was fueled in part by Binance processing transactions tied to illegal activities.
Prosecutors further accused Binance of enabling transactions between US users and individuals in sanctioned nations like Iran, a country deemed a national security threat by the US government. Despite resigning as CEO, Zhao reportedly retains a substantial ownership stake in Binance, estimated at around 90%.
The four-month sentence imposed on Zhao was significantly shorter than the recommended range of 12 to 18 months under federal sentencing guidelines. It also fell well short of the three years initially sought by the US Department of Justice.
Zhao’s defense team argued for probation instead, citing a lack of precedent for prison sentences in similar Bank Secrecy Act cases.
The legal settlement also included a hefty $4.3 billion fine and forfeiture order imposed on Binance. Additionally, Zhao himself was hit with a $50 million personal fine.
Looking ahead, Zhao revealed plans to rejoin the crypto industry after completing his sentence. He intends to focus on managing his existing cryptocurrency holdings and pursuing passive investment opportunities.
Interestingly, he also framed his legal troubles as a turning point for the entire crypto industry. Zhao emphasized the need for stricter regulations and compliance within the space, suggesting a potential shift in his approach moving forward.
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