Justice
Binance founder sentenced to four months in prison
Changpeng Zhao is ranked 38th on Bloomberg’s billionaire list with an estimated fortune of almost $40 billion. photo
© Hugo Amaral/SOPA Images via ZUMA Press Wire/dpa
He is likely to become the richest inmate in a US prison: The founder of the cryptocurrency exchange Binance is expected to be in prison for four months. The judge stayed well below the prosecution’s request.
The founder of the cryptocurrency exchange Binance, Changpeng Zhao was sentenced to several months in prison in the USA. A Seattle judge on Tuesday set the 47-year-old’s sentence at four months, court records show. Zhao and Binance admitted violations of money laundering laws in November. He gave up all positions at the crypto exchange. The prosecution had demanded three years in prison for Zhao, while defense attorneys argued for a suspended sentence.
Binance is a trading platform for digital currencies such as Bitcoin. In terms of trading volume, it is the largest marketplace of its kind. Cryptocurrencies are encrypted, digital money that was created independently of financial institutions, central banks and states. Cryptocurrency transfers are stored in an open database called a blockchain. Anyone who invests in such currencies must be prepared for price fluctuations. The prices of the most important digital currencies collapsed again on Walpurgis Night.
Zhao came to the United States voluntarily
Binance founder Zhao is likely to become the richest inmate in a US prison: On Wednesday, he was ranked 42nd in the Bloomberg financial service’s list of billionaires with an estimated fortune of a good $36 billion. It mainly consists of his stake in Binance. It initially remained unclear exactly when Zhao would begin his prison sentence. The judge recommended incarceration in the Seattle area.
Judge Richard Jones recognized that, despite the threat of punishment, Zhao came to the US voluntarily and cooperated with the investigative authorities. He believes it is unlikely that the Binance founder will commit crimes in the future – but at the same time the verdict should also have a deterrent effect. Zhao said he wants to build an online education platform in the future.
After years of investigation, the US justice system accused Binance and Zhao of circumventing money laundering and sanctions laws. Despite millions of customers in the USA, the operators of the crypto exchange did not set up the required controls. This made questionable flows of money possible, including around $900 million between the USA and Iran, which is affected by sanctions. According to the prosecution’s allegations, Zhao instructed Binance employees, among other things, to communicate with US customers by telephone so as not to leave any traces.
Billion dollar fine for Binance
At the same time, the Binance case attracted much less attention than the collapse of competitor FTX, whose founder Sam Bankman-Fried was sentenced to 25 years in prison for fraud in March. Binance always emphasized that US authorities did not accuse the company of embezzling customer funds or manipulating markets. However, US Attorney General Merrick Garland pointed out in November that Binance had become the world’s largest trading center for cryptocurrencies due to violations of the law. Binance’s admission of guilt resulted in penalties of around $4.3 billion. Zhao personally pays $50 million.
The value of Bitcoin was just over $57,000 on the Bitfinex trading platform on Wednesday. On Tuesday it still cost $64,000. Since peaking at almost $74,000 in mid-March, the largest and oldest cryptocurrency has lost around 22 percent of its value. In the shadow of Bitcoin, other cryptocurrencies also lost value. The second largest cryptocurrency, Ether, slipped below the $3,000 threshold. On a weekly basis, Ether lost around eight percent and thus held up slightly better than Bitcoin, which lost over ten percent during this period.