Former Binance CEO Changpeng Zhao (center) leaves federal court in Seattle on April 30, 2024.
Jason Redmond | AFP | Getty Images
Binance’s billionaire founder, Changpeng Zhao, has been booked into a low-security federal prison in Lompoc, Calif. CNBC reached out to Zhao’s legal team at Latham & Watkins, which confirmed that the former cryptocurrency chief executive is currently in custody.
Zhao pleaded guilty to facilitating money laundering through his cryptocurrency exchange and was sentenced to four months in prison in April.
The sentence given to the former Binance CEO was significantly shorter than the three-year sentence sought by federal prosecutors, who had sought five months of probation instead of the 12-18 months that the sentencing guidelines called for.
“I’m sorry,” Zhao told U.S. District Judge Richard Jones before being sentenced, according to Reuters.
“I believe the first step in taking responsibility is to fully admit mistakes,” Zhao was reported as saying in court. “I failed to implement an adequate anti-money laundering program. … I now realize the gravity of that mistake.”
In November, Zhao, known colloquially as “CZ,” reached an agreement with the U.S. government to resolve a years-long investigation into Binance, the world’s largest cryptocurrency exchange. As part of the settlement, Zhao stepped down as the company’s CEO.
Though Zhao no longer runs the company, he is widely reported to own roughly 90% of Binance’s shares.
The suspects’ charges include knowingly failing to implement an effective anti-money laundering program as required by the Bank Secrecy Act and allowing Binance to process transactions involving the proceeds of illegal activities, including transactions between U.S. persons and individuals in sanctions-targeted jurisdictions.
The US ordered Binance to pay $4.3 billion in fines and forfeitures, with Zhao agreeing to pay a $50 million fine.
FTX founder and former CEO Sam Bankman Freed is also serving time in a U.S. federal prison. Bankman Freed, who was convicted on all seven criminal counts in November, was sentenced in March to 25 years in prison for securities fraud conspiracy that destroyed his cryptocurrency exchange and associated hedge fund Alameda Research. In his sentencing in Manhattan federal court, Bankman Freed was also ordered to pay $11 billion in forfeiture.
Unlike Mr. Zhao, Mr. Bankman Freed did not make a deal with the government. Instead, some of his executives cooperated with prosecutors. Caroline Ellison, the former CEO of Alameda and Mr. Bankman Freed’s ex-girlfriend, appeared as a government witness at his criminal trial.
— CNBC’s Jim Fokine contributed to this report.
