- The CEO of Binance, Changpeng Zhao, was sentenced to 4 months in prison for money laundering violations.
- Changpeng Zhao stepped down from the CEO position as part of a plea deal with U.S. authorities.
Binance CEO Steps Down in Money Laundering Plea Deal
Changpeng Zhao, more popularly known as CZ, was sentenced to 4 months in prison for violating U.S. anti-money laundering laws.
The judge sentenced CZ to a term below the guidelines, citing CZ’s lack of nefarious intent.
CZ will also pay $50 million as a personal fine, while Binance will pay $4.3 billion in penalties.
CZ was forced to step down as the CEO of Binance (BNB), but is expected to stay in control from behind the scenes.
Binance has weathered the charges, sentence and fine with little impact on its bottom line.
Money Laundering Continues to Weigh on Crypto Adoption
Crypto’s decentralized nature makes it ideal for criminals to launder their proceeds and evade sanctions.
The charges against Binance stated that their lax enforcement allowed more than $898 million in sanctions violations.
Some of the groups involved in these sanctions violations include Al Qaeda and Hamas, among other terrorist groups.
Sanctioned countries also used Binance to transfer funds, including Syria, Cuba and Iran.
Diverging Opinions on Binance CEO’s Plea Deal
There was a substantial gap between the prosecution and defense in the recommended sentencing.
The prosecution argued that CZ showed a blatant disregard for U.S. laws and that the scope of the impact should be reflected in sentencing.
The defense countered that CZ was more careless than nefarious, and also noted that he was an otherwise responsible businessman with a family.
The judge favored the defense, pointing out that while CZ was aware of the lax enforcement, he was never made aware of any of the actual criminal activity taking place.
In his ruling, the judge also cited CZ’s willingness to admit wrongdoing and make amends as reasons for the lower sentence.
“The DOJ should have charged dozens of people connected to Binance and should have not only prosecuted them and punished them but barred them from the financial industry forever.”
— Dennis Kelleher, CEO of Better Markets Inc., stated.
Fines on Top of Time in Binance CEO’s Plea Deal
In addition to the 4 months prison sentence, CZ must also pay a personal fine of $50 million.
While this is a large amount for a money laundering case, it is comparatively small considering CZ’s estimated net worth of $33 billion.
As part of the plea deal, Binace itself will pay $4.3 billion in penalties for violating sanctions and anti-money laundering laws.
CZ Expected to Stay in Charge Behind the Scenes of a Thriving Binance
Although CZ was forced to step down as CEO of Binance as part of his plea deal, he is expected to remain in overall control.
CZ is estimated to own more than 90% of Binance equity, allowing him to wield substantial influence over the board.
The board of directors was also recently reshuffled to include his wife and many close friends.
