Binance founder Changpeng Zhao begins prison sentence

Binance founder Changpeng Zhao has reportedly arrived at a low-security federal prison in Lompoc, California, to begin his four-month prison sentence.

The news was confirmed by the legal team at Latham and Watkins, according to CNBC. EljaBoom, a well-known blockchain influencer and crypto investor, also shared the update on X.

Referring to Zhao as a “friend,” Boom noted that the former Binance CEO began his prison sentence in a low-security federal prison in Lompoc, California. “Low security means prisoners have more freedom because they are not seen as dangerous and are trusted not to escape,” he added.

CZ began his sentence at a low-security federal prison in Lompoc, California.

(low Security) refers to: a type of prison where inmates have the most freedom because they are not considered dangerous and can be trusted not to escape

Stay safe my friend
C.Z. pic.twitter.com/w1naxjBnOg

— Elja (@Eljaboom) June 1, 2024

Zhao, often referred to as “CZ” in crypto circles, was sentenced to four months in prison in April after pleading guilty to charges that Binance violated US anti-money laundering laws.

After his guilty plea, US authorities demanded that Zhao resign as CEO of Binance. Under his leadership, Binance has become one of the world’s largest cryptocurrency exchanges by volume.

Prosecutors allege that some of this growth was driven by transactions involving proceeds from Binance’s illegal activities.

They also accused the crypto exchange of facilitating transactions between US users and individuals in countries under US sanctions, such as Iran, which the government deems a threat to national security. Despite resigning, Zhao reportedly still holds a significant stake in Binance, estimated at 90%.

The four-month sentence given to Zhao was far less than the 12 to 18 months recommended by federal sentencing guidelines and well below the three years originally recommended by the U.S. Department of Justice.

Zhao’s lawyers had requested probation instead, emphasizing that no one had ever been sentenced to prison in a similar case under the Bank Secrecy Act.

As part of the legal ruling, Binance was ordered to pay $4.3 billion in fines and liens. Zhao personally accepted the $50 million fine.

Following his sentencing, Zhao outlined his plans for the future, stating that he plans to return to the crypto industry after serving his sentence and focus on maintaining existing crypto assets and passive investing.

He also noted that the period following his guilty plea marked a “new phase for the crypto industry” and emphasized the importance of players in the space adhering to regulations and compliance.