Michael Bacina

May 12 min

Binance's CZ sentenced to serve time following plea deal

The enigmatic billionaire former CEO of Binance has been sentenced to 4 months in prison in the United States.

Changpeng “CZ” Zhao was sentenced by US Federal judge after prosecutors sought a three year sentencing submissions, saying the:

scope and ramifications of Zhao’s misconduct were massive

The prosecutor's sentencing submission opening with a quote from CZ to his staff saying "Better to ask forgiveness than permission". However, CZ's lawyers had sought a sentence of probation only, arguing that in comparison to banking industry cases concerning breaches of anti-money laundering laws:

no defendant in a remotely similar ... case has ever been sentenced to incarceration

The guidelines for sentencing suggested an 18 month sentence would be appropriate, so the 4 month sentence will be viewed as a win for CZ.

The US Department of Justice, together with the Treasury Department and the Commodity Futures Trading Commission (CFTC), reached a plea deal last year under which Binance and CZ pleaded guilty to anti-money laundering and US sanctions violations in connection with failed controls on the Binance platform. Binance agreed to pay a USD$4.3B fine and CZ stepped down as CEO of Binance. CZ had voluntarily travelled to the US for the trial and had been free on a US$175M bond prior to hearing, meeting with tech luminaries and politicians.

The US Securities and Exchange Commission (SEC) was not a party to the proceedings and with Binance facing a class action in Canada, as well as staff being arrested in Nigeria, it remains to be seen if the SEC will bring a prosecution against Binance, or whether this will mark the beginning of the end of large prosecutions of digital currency exchanges in the US and a move towards licensing and regulation.

By Michael Bacina