The Blubber

Binance previous CEO CZ sentenced to 4 months in prison.

Before his sentencing hearing on Tuesday, Zhao, known as CZ, expressed regret for his actions as CEO of Binance, the cryptocurrency exchange he established in 2017.

“I deeply regret the choices that have led me to this point,” he stated in a letter to the judge. “I can assure you that such mistakes will not be repeated.”

As part of a coordinated settlement with the federal government last autumn, Binance agreed to pay over $4 billion in fines and other penalties. The company acknowledged engaging in activities related to money laundering, unlicensed money transmission, and violations of sanctions.

Zhao, 47, with a personal fortune of nearly $40 billion according to Bloomberg, agreed to resign as CEO and pay a $200 million fine.

After a lengthy investigation, U.S. authorities announced in November that Binance, the world’s largest cryptocurrency exchange, had allowed malicious actors to use its platform, facilitating transactions connected to child exploitation, drug trafficking, and terrorist financing.

Furthermore, Binance lacked procedures to identify or report transactions with money-laundering risks, and employees were aware that such negligence would attract criminals to the platform. According to court documents, one Binance compliance staffer remarked: “Is it too difficult to launder drug money these days? Come to Binance, we have cake for you.”

Zhao's sentencing comes shortly after his former rival, Sam Bankman-Fried, received a 25-year federal prison sentence for his role in a years-long, multibillion-dollar fraud involving FTX, the second-largest crypto exchange before its abrupt collapse in the fall of 2022.

These consecutive sentences underscore the Department of Justice's tougher stance on financial crimes, especially in the crypto sector.

Crypto investors and businesses are eager to change the industry's image as a haven for criminals and transition toward mainstream acceptance. However, crypto skeptics remain wary of the entire $2 trillion industry and believe the DOJ has not done enough to combat it.

"The message sent today by the Justice Department is that 'crime pays,'" said Dennis Kelleher, CEO of the nonprofit Better Markets, in a statement on Tuesday. "CZ was not even charged with money laundering; he was only charged with failing to have an anti-money laundering program. This is less than a slap on the wrist."