The billionaire founder of Binance, Changpeng Zhao, has reported to a minimum-security federal detention center in Lompoc, California. Requests were made to Zhao’s legal team at Latham & Watkins to verify the current custody status of the former cryptocurrency leader.
Zhao received a four-month prison sentence in April after admitting guilt to charges related to facilitating money laundering on his cryptocurrency platform.
The sentencing imposed on Zhao was notably shorter than the three-year term sought by federal prosecutors. His defense team had requested a five-month probation period. The recommended sentencing guidelines had indicated a confinement period of 12 to 18 months.
Before being sentenced, Zhao expressed remorse to U.S. District Judge Richard Jones, stating, “I apologize.” According to reports from Reuters, Zhao acknowledged in court, “I believe the first step in taking responsibility is acknowledging the errors. In this instance, I failed to establish an adequate anti-money laundering system. … I am now fully aware of the gravity of that mistake.”
In November, Changpeng Zhao, also known as “CZ,” finalized an agreement with the U.S. government to settle a prolonged investigation into Binance, the world’s most extensive cryptocurrency exchange. As part of the resolution, Zhao resigned from his CEO position at the company.
Although he no longer holds active leadership within the organization, reports indicate that Zhao retains an approximate 90% ownership stake in Binance.
The alleged offenses included deliberately neglecting the implementation of a robust anti-money laundering protocol mandated by the Bank Secrecy Act. Furthermore, Binance was found to have facilitated transactions involving proceeds from illicit activities, including those between American individuals and parties in sanctioned territories.
The U.S. mandated Binance to pay $4.3 billion in fines and forfeiture. Zhao consented to a $50 million penalty.
In a separate case, Sam Bankman-Fried, founder and former CEO of FTX, is presently serving a sentence in a U.S. federal penitentiary. Following his conviction on all seven charges in November, Bankman-Fried was sentenced to 25 years in prison in March for his involvement in a securities fraud conspiracy that led to the downfall of his cryptocurrency exchange and affiliated hedge fund, Alameda Research. At his sentencing in a Manhattan federal court, Bankman-Fried was also directed to pay $11 billion in forfeitures.
Unlike Zhao, Bankman-Fried did not negotiate a deal with authorities. Instead, other senior officials within his executive team cooperated with the prosecutors. Caroline Ellison, Alameda’s former CEO and Bankman-Fried’s former partner, served as a key witness for the government during his criminal trial.
Contributions to this report were made by Jim Forkin from good.