Binance Founder Bags 4 Months Jail Term Following Involvement in Money Laundering

Just recently, Changpeng Zhao, the founder of Binance, which is reported to be the largest cryptocurrency exchange in the world, was sentenced to four months in prison on allegations of money laundering charges. The prosecution requested a drastic reduction from the previous three years.

Judge Richard Jones again dismissed the Justice Department's petition to sentence Zhao to a longer jail term. According to him, there is no proof that Binance's founder knew of any illicit activity on the platform. The judge also rejected the DOJ's request to sentence Zhao to 36 months.

The sentencing of the Binance Chief took place on Tuesday in a United States federal court located in Seattle.

Changpeng Zhao faced charges not directly for money laundering but because he failed to establish an adequate anti-money laundering program at Binance. The U.S. government takes these steps to implement measures to crackdown on financial crimes within the cryptocurrency sector.

Zhao and the Binance crypto exchange admitted violating American anti-money laundering and sanctions laws last November. Zhao agreed to step down as Binance CEO, pay a $50 million fine, and admit that Binance would owe $4.3 billion as part of a complete agreement with the government that permits the cryptocurrency exchange to continue functioning.

The Binance founder agreed to post a $175 million bail to be released from custody until sentencing. In November 2023, prosecutors in the United States asked to have Zhao barred from leaving the nation until after his trial. 

Before receiving his sentence, Zhao apologised and said, "Words cannot express how deeply I regret the choices that resulted in me being before the Court."

In a letter to the judge, he further said, "Rest assured that it will never happen again."

Binance has also agreed to pay over $4 billion in fines and penalties as part of a larger settlement with the federal government last autumn. The crypto platform admitted involvement in unlicensed money transmission, sanctions violations, and anti-money laundering infractions.

Zhao has agreed to resign as CEO of Binance and will pay $200 million in personal fines despite having a personal fortune that Bloomberg estimates to be close to $40 billion.

Investigations into Binance showed that Binance enabled transactions connected to several illegal activities, such as the funding of terrorism, the exploitation of underage girls, and the trafficking of drugs. Court records also exposed Binance's internal communications, which showed a resentful attitude towards compliance.

A compliance employee stated, "We need a banner 'is washing drug money too hard these days – come to Binance we got cake for you.'"

This sentencing highlights the Department of Justice's tougher enforcement approach against the cryptocurrency industry. It comes just after Sam Bankman-Fried's 25-year jail sentence for his role in a multibillion-dollar scam at FTX.

Critics remain doubtful despite cryptocurrency companies' efforts to change their reputations and become more mainstream in the financial industry. Dennis Kelleher, CEO of the nonprofit Better Markets, criticized the light sentencing, stating, "' Crime pays' is the message sent today by the Justice Department."

Also, Binance has been clashing with the government on allegations concerning tax evasion, resulting in the federal government holding two Binance executives in detention until the case is resolved. However, this has led to the escape of one executive, Nadeem Anjarwalla, who escaped from detention and has been traced down to his hideout in Kenya. 

How he got there has not been stated until now, but the positive result in apprehending him is due to the collaboration with the Nigerian government and Interpol. Before now, the naira has been decreasing following pressure to purchase the greenback, also known as the dollar. 

Findings from financial analysts showed that Binance was one of the factors that devalued the naira. The government called for a crackdown on the crypto platform, and Binance sent two executives to negotiate with the government.