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Binance Founder Sentenced to Four Months in Prison

Court documents revealed that Binance lacked a proper anti-money laundering system, acted as an unlicensed money transmitter, and broke sanctions laws.

Former CEO and founder of Binance, Changpeng Zhao, known as “CZ,” was sentenced to four months in prison on Tuesday, April 30, for his role in the company’s violations of the United States anti-money laundering laws.

Court documents revealed that Binance lacked a proper anti-money laundering system, acted as an unlicensed money transmitter, and broke sanctions laws.

“Zhao’s willful violation of US Law was no accident or oversight. He made a business decision that violating US law was the best way to attract users, build his company, and line his pockets,” the US Department of Justice said in a court filing ahead of the sentencing.

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In November 2023, Zhao pleaded guilty to violating anti-money laundering laws that enabled hundreds of millions of dollars in transactions involving US-sanctioned entities, including Iran and Cuba, to pass through the Binance platform.

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As part of the plea agreement which resulted in significant consequences for Binance, Zhao stepped down and paid a hefty fine of $50 million while the exchange itself was slammed with a record-breaking penalty of $4.3 billion for violating anti-money laundering and sanctions laws

Additionally, Binance was obligated to provide regular reports on its compliance efforts to the US government.

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The court hearing determining CZ’s fate lasted for roughly two and a half hours.

Judge Jones, who presided over the case, acknowledged CZ’s dedication to building Binance.

“You risked your entire net worth to make Binance a success,” he stated.

Although prosecutors pushed for a harsher sentence of 36 months in prison, CZ’s defence team leveraged his positive public image and argued for probation citing the lack of precedent for incarceration in similar cases.

Prosecutors said they wanted to deter others who are tempted to build fortunes and business empires by breaking US laws.

The terms of CZ’s sentence do not require him to forfeit his wealth derived from founding Binance. Reports indicate he retains an estimated 86% ownership stake in the company, translating to a net worth in the tens of billions of dollars.

In Feb 2024 two Binance executives in Africa were detained in Nigeria for alleged tax evasion and other criminal offenses. One, however, by the name of Mr Nadeem Anjwarwalla managed to escape the Abuja Guest House and fled the country with a Kenyan passport on March 28.

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