CZThe verdict on Changpeng “CZ” Zhao is in. And you guessed it right. The United States Justice Department was not going to let him walk away unscathed. The reports have it that Binance founder and former CEO has been sentenced to 4 months in prison. What was his crime, you ask? Let us tell you all about it.
CZ is going to jail
Changpeng “CZ” Zhao, the founder and former CEO of the Binance crypto exchange, has been sentenced to four months in prison, according to reports on Tuesday. U.S. Judge Richard Jones expressed doubt right away during a hearing of the Department of Justice’s arguments for a lengthy sentence.
Prosecutors had suggested that the former Binance CEO should serve a three-year sentence for his failure to uphold an adequate Anti-Money Laundering (AML) program during his time at the crypto exchange. He pleaded guilty to this charge in November. CZ’s legal team has requested probation on his behalf.
Based on reports from the courtroom, Judge Jones firmly stated that there was no indication that CZ had been made aware of any specific illegal activities at Binance. In response to the prosecutors’ plea to extend the sentence from 18 months to three years, the judge expressed his disagreement.
During the final arguments, the government’s attorneys argued that CZ’s approach at Binance seemed to prioritize seeking forgiveness rather than permission. They contended that he should not be permitted to profit from his actions.
There’s no evidence that the defendant was ever informed […] The court finds the defendant has accepted responsibility […] Everything I see about you and your characteristics are of a mitigating nature.
U.S. District Court for the Western District of Washington, Judge Richard Jones
Zhao’s mother, sister, nephew, and son were in court with him as he learned his fate while sporting a navy blue suit and light blue tie. Zhao had buzz-cut hair. Zhao agreed to pay a $50 million fine in his plea agreement from last year, which was a tiny portion of his total net worth.
The crypto community reacts to his sentencing
Lawyers representing Zhao cited undisclosed information in court documents as a significant factor for the judge to take into account during the sentencing process. His legal team made the case that Judge Jones could potentially impose a probation period of less than six months, citing concerns about his wealth making him vulnerable in a prison setting.
Incarceration is necessary to reflect the seriousness of the offense […] A probationary sentence here will incentivize others to break the law and to do it in the largest scale possible.
Kevin Mosley (From the prosecutors side)
CZ admitted guilt before to his sentencing and claimed to have “had a lot of quiet time alone to think and reflect.” He further acknowledged taking ownership of Binance’s inability to put an AML program into place that worked.
I think the first step to taking responsibility is to fully recognize the mistakes. Here, I failed to fully set up a [know-your-customer program] … I also recognize the importance of having a robust KYC/[anti-money-laundering] program. That is why I directed Binance to cooperate with the U.S.’s investigation.
CZ
The hearing was originally rescheduled from February, as it was scheduled after the sentencing of former FTX CEO Sam Bankman-Fried, who was convicted of seven felony charges in November. Bankman-Fried has been sentenced to 25 years in prison, however, his legal team has taken action by filing a notice of appeal for both the conviction and sentence.
Attendees of CZ’s hearing noted that the event did not generate as much attention as Bankman-Fried’s trial or sentencing, which saw long lines forming outside the New York City courthouse.
Lawyers representing the Justice Department also disagreed with drawing comparisons between the two individuals involved in the crypto case, emphasizing that the focus should be on the nature of the crimes rather than their personal characteristics.
It is worth mentioning that Zhao cooperated with the U.S. government, as argued by a defense attorney, who emphasized that this collaboration is extensively documented and even recognized by the DOJ.
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