Billionaire and founder of Binance, Changpeng Zhao, reportedly began serving his prison sentence at Lompoc, California, in relation to a money laundering case involving his cryptocurrency exchange.
According to CNBC International, on Sunday (June 2, 2024), authorities sentenced Zhao to four months in prison in April 2024 after he pleaded guilty to money laundering charges at his cryptocurrency exchange.
CNBC is currently attempting to contact Zhao’s legal team at Latham & Watkins to confirm his detention
The sentence given to the former Binance boss is less than the three-year term federal prosecutors had sought.
Meanwhile, the defense requested a five-month probation period.
“I believe the first step in taking responsibility is fully acknowledging the wrongdoing,” he said in court.
“In this instance, I did not implement a sufficient anti-money laundering program. I now understand the gravity of this error,” he stated.
In November 2023, Zhao, commonly known as “CZ,” made an agreement with the U.S. government to settle a multi-year investigation into Binance, the world’s largest cryptocurrency exchange.
As part of this process, Zhao resigned as CEO of the company.
Although he no longer runs the company, Zhao reportedly owns about 90% of Binance shares.
The alleged criminal acts include willfully failing to implement an effective anti-money laundering program as required by the U.S. Bank Secrecy Act and allowing Binance to process transactions involving proceeds from unlawful activities, including transactions between Americans and individuals in sanctioned jurisdictions.
The U.S. ordered Binance to pay fines and forfeitures totaling USD 4.3 billion (approximately IDR 69.8 trillion). Zhao agreed to pay a fine of USD 50 million.
This case has drawn significant attention from both the crypto community and regulatory bodies worldwide, highlighting the increasing scrutiny on cryptocurrency exchanges and their compliance with financial regulations. Zhao’s willingness to plead guilty and accept responsibility may serve as a precedent for how similar cases could be handled in the future. The implications of this case are far-reaching, potentially influencing how cryptocurrency exchanges operate and comply with laws designed to prevent illicit activities.
The Lompoc prison, where Zhao is serving his sentence, is known for housing several high-profile white-collar criminals, reflecting the seriousness with which the authorities are treating this case. As Zhao serves his sentence, the cryptocurrency world will be closely watching the developments and the potential impact on Binance’s operations and its future leadership.
This incident underscores the importance of robust compliance programs within cryptocurrency exchanges to prevent similar issues and maintain the integrity of the financial system.
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