Coinspeaker
Binance’s CZ Could Be Richest Person Ever to Go to Prison in US
In a notable turn for the crypto industry, Changpeng “CZ” Zhao, the visionary behind Binance, awaits sentencing scheduled for Tuesday, April 30th. The sentence could potentially impose a three-year prison term, exceeding federal guidelines. His guilty plea last November to violating anti-money laundering regulations set forth by the US. Department of Justice now weighs heavily.
Prosecutors propose a stricter punishment due to Zhao’s dismissive stance towards compliance. Allegedly, he instructed his colleagues that it’s “better to ask for forgiveness than permission”. With an estimated personal wealth of $43 billion, Zhao could become the richest person to enter the US federal if convicted.
Despite CZ’s plea and facing serious charges, Binance remains successful in the growing crypto market. The exchange kept its leading market share, reporting significant growth with over 40 million new users in 2023, a 30% increase from the previous year. Customer holdings on Binance exceeded $100 billion. Binance likely generated around $9.8 billion in annualized revenue through March, according to estimates by Bloomberg.
Binance Settles $4.3 Billion Fine
Zhao reached a plea deal, agreeing to a personal fine of $50 million, while Binance consented to pay $4.3 billion in penalties to resolve allegations of violating anti-money laundering and sanctions laws. The claims included the exchange’s failure to prevent or report suspicious trading activities linked to designated terrorist organizations.
The Department of Justice recommended a three-year prison sentence for Zhao, citing “significant harm to US national security”. Despite the agreement and Zhao’s reduced role at Binance, he still holds a strong influence through the company’s new board of directors, which includes close associates and his partner Yi He.
Binance faces additional legal hurdles as the US Securities and Exchange Commission (SEC) initiated proceedings against the company and its affiliate Binance.US. The SEC alleges that the exchanges operated without proper registration as exchanges and broker-dealers, among other charges. This legal battle could extend for years as Binance fights the charges.
A Shifting Leadership and Industry Outlook
Following Zhao’s guilty plea, Binance underwent leadership changes, with Richard Teng taking over as CEO and public face of the company, while Yi He plays a key role in operations. Zhao’s presence has diminished, but he maintains a behind-the-scenes influence, as evidenced by praise-filled reference letters submitted to the court by board members and long-time associates.
Despite the uncertainty surrounding Zhao’s sentencing and Binance’s legal entanglements, the exchange’s day-to-day operations continue without significant disruptions. Investors report little change in their trading experiences, and some view the settlement as providing a level of certainty amid ongoing regulatory scrutiny.
As Zhao awaits his sentence, he has expressed interest in pursuing other ventures, including biotech startups and an online primary-school program. His fate now rests with federal judge Richard Jones, who will determine whether the billionaire will serve time in a low-security prison and, if so, for how long.
Binance’s CZ Could Be Richest Person Ever to Go to Prison in US
