Former Binance CEO Changpeng Zhao sentenced to four months in prison

Former Binance CEO Changpeng Zhao was sentenced to four months in prison on Tuesday in Seattle after pleading guilty to money laundering charges.

During the sentencing hearing on Tuesday, Zhao apologized and said he wanted to take responsibility for his "mistakes." He also said Binance implemented a Know Your Customer and anti-money laundering program and is cooperating with the government, according to reporting from The Verge.

Prosecutors sought 36 months of imprisonment for Zhao, and said he and his exchange targeted U.S. users and purposefully violated U.S. laws.

"Zhao’s willful violation of U.S. law was no accident or oversight," prosecutors said in their previous sentencing memo. "He made a business decision that violating U.S. law was the best way to attract users, build his company, and line his pockets."

Judge Richard Jones of the U.S District Court for the Western District of Washington said on Tuesday he did not agree with a sentencing of three years and said Zhao was never informed of illegal activity, according to in the courtroom reporting from CoinDesk.

Meanwhile, lawyers for Zhao asked the court to sentence him to probation and said the former executive "deeply regrets his offense" and has shown that he has accepted responsibility.

"Mr. Zhao is a forty-seven-year-old first-time offender. His life has been built on three pillars: devotion to his family, developing technology (and especially Binance) as a force for positive change in the world, and serving the greater good," his lawyers said.

His lawyer, William Burck, also noted that Zhao faces risks in certain security facilities because he's well known, his wealth and he cooperated with the government, according to reporting from The Verge.

In November, Zhao pleaded guilty in the U.S. for failing to implement an effective anti-money laundering program and agreed to pay a $50 million fine. Binance agreed to pay $4.3 billion in one of the largest corporate settlements in history. Zhao also subsequently stepped down as CEO and was replaced by Richard Teng, who previously served as the CEO of the Financial Services Regulatory Authority at Abu Dhabi Global Market before joining Binance.

Binance is also entangled in a lawsuit with the U.S. Securities and Exchange Commission. The regulator sued Binance Holdings and Zhao in June, accusing the crypto exchange of lying to customers, failing to restrict U.S. investors from accessing Binance.com, misdirecting capital to separated investment funds owned by Zhao, and operating as an unregistered exchange.

Over 160 letters of support from family, friends and crypto industry professionals were filed on behalf of Zhao last week. One letter, from his long-time friends, said Zhao is "capable of learning from this experience, making amends, and becoming a productive member of society" and asked for a lighter sentence.

Better Markets CEO Dennis Kelleher called the situation a "miscarriage of justice" and said prosecutors should have gone after other Binance employees as well.

"Notwithstanding the shocking, years long, egregious crimes Binance’s money laundering enabled and facilitated, the Department of Justice (DOJ) charged just one person, Binance’s Founder, Owner, and former Chief Executive Officer, Changpeng Zhao (CZ), and just one count of violating the Bank Secrecy Act for failing to ensure Binance implemented an effective anti-money laundering compliance program," Kelleher said in a memo on Monday.

Kelleher also cited Zhao's wealth. Bloomberg reported Zhao to have a net worth of about $42.9 billion.

"Yet, for his crimes, DOJ fined him just $50 million, or just .1% of his net worth," Kelleher added. "No one can seriously think that is 'significant' or that it will 'effectively punish Zhao for his criminal acts' or 'deter others,' as DOJ, Treasury and other government officials claimed."

Zhao's sentencing comes about a month after his archrival, former FTX CEO Sam Bankman-Fried, was sentenced to 25 years. Last year a jury found him guilty of all seven criminal accounts of defrauding the customers, lenders and investors of FTX.

At the time of Bankman-Fried's sentencing, some said Zhao showed remorse, while Bankman-Fried didn't.

"CZ is in some ways much smarter than Sam Bankman-Fried," said Terrence Yang, managing director at Swan Bitcoin last month. "They're both pretty evil."

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