Former Binance CEO Arrested for 4 Months in US for Money Laundering Violations

Washington:

The founder of cryptocurrency firm Binance was sentenced to four months in US prison on Tuesday after pleading guilty to money laundering charges, in the highest-profile crypto case since Sam Bankman-Fried was arrested.

Changpeng Zhao, a Canadian, resigned from his position at the world’s largest cryptocurrency exchange platform late last year as part of a deal with US authorities.

According to investigations by two Treasury agencies, Binance failed to prevent transactions from movements such as the Islamic State group, Al-Qaeda or the armed wing of Hamas.

Zhao pleaded guilty to violating U.S. anti-money laundering laws and Binance agreed in February to pay $4.3 billion to settle the charges.

Prosecutors asked the judge to impose three years in prison for a crime that normally results in probation, according to a court document.

“He made a business decision that violating U.S. law was the best way to attract users, build his company and line his pockets,” Justice Department lawyers said of Zhao in a sentencing memorandum.

“The sentence in this case will not only send a message to Zhao, but also to the world.”

Zhao’s lawyers countered in a filing that being punished with probation is fair, appropriate and in line with legal precedent.

They cited Zhao’s acceptance of responsibility along with what they called his philanthropic record.

“I made mistakes and I must take responsibility,” Zhao, who lives in the United Arab Emirates, said in a post on X, formerly Twitter, in November.

He has been in the United States ever since.

Binance was created in 2017 and has dominated much of the cryptocurrency trading market, turning its founder and chief executive, Zhao, into a billionaire.

Although Binance was founded in China, Zhao has moved its operations to other locations internationally following a crackdown on the crypto sector by Beijing.

Binance runs cryptocurrency exchanges and provides other services around the world, but it was dealt a blow when cryptocurrency markets collapsed and regulators began investigating the legality of its business.

The volatile industry boomed in 2021, with a range of complex products and celebrity endorsements propelling it to a valuation of over $3 billion in 2022.

But a series of scandals, including the collapse of Binance’s main rival exchange FTX in November 2022 and criminal charges against several industry executives, caused public trust to evaporate and investors to withdraw their money from crypto.

FTX founder Bankman-Fried was sentenced to 25 years in prison in March.

The crypto industry has rebounded in recent months, thanks in large part to U.S. regulators giving the green light to bitcoin exchange-traded funds (ETFs), which allow investors to trade the asset without actually opening a crypto account.

Binance’s new CEO Richard Teng told AFP this month that the company had spent hundreds of millions of dollars on compliance and was working closely with regulators.

(Except the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)