In a significant legal development for the crypto industry, Changpeng Zhao, widely known as CZ, the former CEO of Binance, has been sentenced to four months in prison after pleading guilty to charges related to enabling money laundering on his crypto exchange.
The sentence, handed down in Seattle federal court, was considerably less than the three years sought by federal prosecutors, who had accused Zhao of facilitating illicit financial activities.
CZ Stresses Importance Of Compliance
Following the verdict, CZ expressed gratitude for the support he had received during this time, acknowledging the letters, messages, and other gestures of encouragement.
Zhao reaffirmed his commitment to serving his sentence, completing this phase of his life, and focusing on his next chapter, which he hinted would have something to do with education.
CZ also emphasized that he would continue as a passive investor and holder in the cryptocurrency market. Notably, he remarked that the crypto industry had entered a new phase, underscoring the importance of compliance in this evolving landscape.
CZ further highlighted that Binance’s scrutiny during this process had resulted in increased transparency and the assurance that customer funds remained secure. Zhao further stated:
Our industry has entered a new phase. Compliance is super important. A silver lining of this whole process is that Binance has been under the microscope. And funds are SAFU.
As part of the settlement with US authorities, CZ stepped down as CEO, leading to the appointment of Richard Teng as the current Chief of Binance. Teng, in a recent interview, addressed the company’s commitment to compliance and acknowledged the need to address “cultural issues.”
He emphasized Binance’s progress towards greater maturity and revealed plans for the potential establishment of a global headquarters, a move aimed at addressing concerns raised by regulators worldwide.
Additionally, Binance took a significant step in reshaping its operations by appointing a board of directors for the first time. The seven-member board includes Gabriel Abed as chairman, and Richard Teng, Heina Chen, Jinkai He, and Lilai Wang from within the company, alongside external members Arnaud Ventura and Xin Wang.
A Binance spokesperson also confirmed to CNBC that the exchange had made substantial compliance enhancements, including strengthening anti-money laundering detection and hiring key compliance personnel.
Ex-Binance CEO’s Personal Wealth Unlikely To Be Impacted
Despite CZ’s prison sentence, legal experts and industry analysts believe that his wealth will remain largely unaffected. Attorneys specializing in corporate law and former federal prosecutors explained that the government’s entitlement is limited to any imposed fines or restitution and does not extend to Zhao’s overall assets or wealth.
Notably, experts expect CZ’s wealth to continue to grow, given the bullish state of the cryptocurrency market and its positive impact on Binance’s trading activity.
It is worth noting that CZ’s situation differs significantly from that of Sam Bankman-Fried, the former CEO and founder of FTX exchange, whose wealth was reduced to zero following the collapse of his crypto empire and subsequent bankruptcy.
As of this writing, the exchange’s native token, Binance Coin (BNB), is trading at $550, down 2.5% in the 24-hour time frame and dropping 10% in the past week alone.
Featured image from CNBC, chart from TradingView.com