On April 30, in a Seattle court, U.S. District Judge Richard Jones delivered a sentence to one of the most prominent figures in the crypto industry, Binance founder and ex-CEO Changpeng Zhao. CZ was sentenced to four months in prison.
The judge noted that the defendant took “extraordinary steps and significant steps” in cooperation with authorities and suggested that CZ is not likely to re-offend. There were repeated references to "matters that are under seal" from the defense side, indicating the depth of his cooperation.
Zhao’s legal team provided over 160 support letters from friends and business partners asking for lighter sentencing. According to the judge, this support and CZ’s overall good reputation were among the main factors that contributed to his final decision.
“To be honest with you, sir, everything I see about your history and characteristics are of a mitigating nature," - said the judge before announcing his verdict.
The judge had the authority to put CZ in prison for up to 10 years with a recommended sentence of 12 to 18 months. Zhao asked to be sentenced to probation but agreed not to appeal any sentence within federal guidelines. The prosecution insisted on rejecting the non-custodial sentence request and asked for twice the maximum recommended under federal guidelines so that CZ would serve 36 months in jail in addition to a $50 million fine.
Even though CZ accepted responsibility, settled disputes with multiple agencies, apologized and promised to "live his life in a manner that will make everyone proud," most experts believed that he would have to spend at least some time behind bars. In a case this high-profile, the judge is likely to be under serious pressure not to be seen as too soft. The crypto community was rooting for CZ, claiming that he is a visionary rather than a criminal and doesn't deserve to be imprisoned.
Zhao pleaded guilty to money laundering in November 2023 and stepped down as the CEO as a part of a historic deal between Binance and the U.S. authorities, which allowed the world’s biggest crypto exchange to remain operational despite having allowed illegal transactions. Even though CZ is now going to prison, we have to pay tribute to his strategic skills. He admitted to prioritizing growth and profits over compliance with U.S. law but apparently managed to stop at just the right time. Unlike his fellow Sam Bankman-Fried, who went down together with FTX exchange and was sentenced to 25 years, or the notorious Do Kwon, Zhao managed first to create a viable product and second to keep Binance (and himself, all in all) running.
“Our industry has entered a new phase. Compliance is super important,” - CZ tweeted.
Even though the exchange still faces various legal issues around the globe, it was granted a fresh start. The new CEO has already taken some steps in switching Binance to a more conventional business model, including establishing the board of directors and searching for formal headquarters.
CZ is also ready for a new chapter in his life. He is now working on a zero-revenue educational project, Giggle Academy, and promises not to launch any new tokens for now, remaining a passive crypto investor. He thanked everyone for all the support provided and - as always - reminded users that their funds are SAFU with Binance.
Some experts (a former employee of SeaTac hired by CZ) raised concerns that the former Binance CEO, being wealthy and a public figure, might face “a risk of threats to his physical and mental health, including but not limited to theft and extortion” if incarcerated, but this remains to be Observed.
