Founder of Binance, World’s Largest Crypto Firm, Sentenced to Four Months

SEATTLE—Billionaire Changpeng Zhao, founder of Binance, the world’s biggest crypto exchange, was sentenced Tuesday to four months in prison, a lighter punishment than requested by prosecutors who hoped to send a message about crime in the industry.

“You had a responsibility to comply with United States regulations. Not some but all,” U.S. District Judge Richard A. Jones said. “You failed at that opportunity.”

Zhao, 47, pleaded guilty in November to violating U.S. anti-money-laundering requirements. He agreed to step down as Binance’s chief executive and pay a criminal fine of $50 million.

“I deeply regret my behavior and I’m sorry,” Zhao said to the judge. His mother, sister, nephew and eldest son appeared at the hearing, sitting in the first row of the gallery. Zhao wore a dark blue suit and light blue tie. “I fully recognize the seriousness of the mistakes I made.”

Zhao will self-report to prison at a later date. As the judge read through his reasoning for imposing his sentence, Zhao nodded along with a muted expression.

The sentence was a culmination of a multiyear U.S. criminal investigation into Binance and showed how U.S. law enforcers have targeted the national-security and money-laundering risks posed by cryptocurrencies. The government has thrown more of its arsenal at the freewheeling crypto industry, including using sanctions to disrupt exchanges and dealers that allegedly cater to cybercriminals and U.S. adversaries.

For Zhao, prosecutors had asked the judge to impose a sentence of three years in prison, double the sentencing guidelines of 18 months. By not implementing an effective anti-money-laundering program, Zhao allowed hackers, drug dealers and sanctions violators to use the exchange to move hundreds of millions of dollars, all while making money, they argued.

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

Lawyers for Zhao requested no prison time and a period of probation, citing the founder’s lack of prior criminal history and the ramifications he had already faced, including stepping down as Binance’s chief executive. Zhao also agreed to pay a criminal fine of $50 million. He remains Binance’s majority shareholder.

Binance was enmeshed for years in a dragnet of U.S. criminal and civil law enforcement, including regulatory claims that it illegally served Americans and violated investor-protection laws.

The crypto firm eventually pleaded guilty to anti-money-laundering violations in a deal with the Justice Department—agreeing to pay fines totaling $4.3 billion and to allow oversight by an independent monitor.

It still faces a civil lawsuit from the Securities and Exchange Commission over allegations that it misused customer funds and ran an illegal exchange in the U.S.

Changpeng Zhao—or CZ as his 8.9 million X followers know him—gained a following for his vehement support of the crypto industry, often telling followers to ignore media coverage of crypto or Binance that he felt created fear, uncertainty or doubt.

He got into crypto after first hearing about bitcoin during a poker game in Shanghai in 2013. He sold his Shanghai apartment for bitcoin and worked for several crypto startups before launching Binance in 2017.

The crypto exchange quickly amassed a large user base, offering services in many languages to reach potential users around the world. Traders lauded it as easier to use than its rivals.

Prosecutors said that Binance knew in 2018 that it had millions of U.S. users, but didn’t set up a program to detect money laundering or violations of sanctions laws. As a result, Binance processed trades between Americans and users believed to be in Iran valued at $899 million between January 2018 and May 2022.

“Binance critically undermined the effectiveness of U.S. sanctions against Iran,” prosecutors said.

The Binance founder wrote in a September 2019 chat that it was “better to ask forgiveness than permission” for amassing so many American users despite laws that appeared to forbid doing so, according to prosecutors.

Binance employees were surprised when Zhao turned up at a Seattle federal courthouse last November to plead guilty to the charge.

The crypto executive slowed down Binance’s settlement discussions in 2023 by telling his lawyers he refused to go to jail or step down, according to people familiar with the matter. Zhao, a Chinese-Canadian, avoided traveling in 2023, staying in the United Arab Emirates, which lacks an extradition treaty with the U.S.

Binance lawyers wanted Zhao to settle the investigation in part because the Justice Department obtained videos of early company meetings with Zhao and executives, people familiar with the matter said. Binance’s lawyers felt the videos showed Zhao’s guilt and described the evidence as “dead to rights,” they said.

Ahead of sentencing for his criminal charges, Zhao had been required to remain in the U.S. despite his efforts to return to the United Arab Emirates, where he lives and has citizenship. Prosecutors said Zhao was a flight risk.

During this time, Zhao launched a new project, an educational platform called Giggle Academy that seeks to provide free basic education from grades 1 to 12.

Meanwhile Binance has continued to thrive. Trading on Binance reached its highest level in almost three years last month, according to data provider CCData. A new CEO, Richard Teng, took the reins when Zhao pleaded guilty. The exchange is still home to more crypto trading than any competitor.

Dave Michaels, Patricia Kowsmann and Vicky Ge Huang contributed to this article.

Write to Caitlin Ostroff at [email protected]