Changpeng Zhao, the founder of Binance, was sentenced to four months in prison. He was accused of taking actions that enabled terrorist organizations and cybercriminals to trade freely on the world’s largest cryptocurrency network.
Changpeng Zhao pleaded guilty to last year’s allegations involving a neglected anti-money laundering program. The sentence, which was four months, is less than the initial three years that the prosecutors requested. The sentence was handed down in a US federal court in Seattle on Tuesday.
Zhao is accused of neglecting to enforce anti-money laundering requirements. This bypass allows the platform to process payments from illegal proceeds. It was carried out by Americans and individuals in sanctions zones. Zhao appeared in court wearing a dark navy suit and a light blue tie.
In a plea deal with the federal government last November, Binance, which was created in 2017, agreed to pay over $4 billion in fines and other penalties. The business acknowledged participating in illegal money transfers, breaking sanctions, and engaging in anti-money laundering operations.
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Zhao himself has agreed to resign and pay a personal fine of $200 million, he is currently worth $40 billion.
The world’s largest cryptocurrency exchange, Binance, was accused of helping criminals fund crimes and launder money. US authorities accused the platform in November. They were alleged with facilitating transactions related to child sex abuse, drug use, and terrorism funding after an investigation.
A month earlier, Sam Bankman-Fried of FTX was sentenced to 25 years in jail for his offenses. Bankman-Fried, Zhao’s rival, was imprisoned for his role in a massive scam at FTX, the second-largest cryptocurrency exchange, that collapsed in 2022.
In November last year, Bankman-Fried was found guilty of seven crimes, including siphoning billions from FTX’s clientele. Zhao, 47, resigned as CEO of Binance and admitted admission to criminal charges less than three weeks after Bankman-Fried was found guilty. This was part of a $4.3 billion deal with the Department of Justice.
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The consecutive sentences highlight the Department of Justice’s tougher stance against financial crimes in general and cryptocurrency in particular. However, the two differ, especially the 296-month difference in their jail terms.
Investors in the crypto industry have been trying to rebrand. This is an attempt to alter the perception of the industry as a haven for criminals and gain more acceptance.
However, critics of the $2 trillion cryptocurrency market often see it with distrust and believe the Justice Department is not doing enough.
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The fall in cryptocurrency values in 2022 exposed fraud and malfeasance throughout the sector, and US authorities are investigating several more prominent figures in the space.
While the development with Binance is worrying, it draws our attention to the need for transparency, compliance, and accountability.
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