Former Binance CEO Changpeng Zhao, center, leaves a federal courthouse in Seattle on April 30, 2024.
Jason Redmond | AFP | Getty Images
Binance's billionaire founder, Changpeng Zhao, has reported to a low-security federal prison in Lompoc, California. CNBC has reached out to Zhao's defense team at Latham & Watkins to confirm that the former cryptocurrency chief is now in custody.
Zhao was sentenced to four months in prison in April after pleading guilty to charges of enabling money laundering on his cryptocurrency exchange.
The sentence given to the former Binance chief was far short of the three years that federal prosecutors were seeking. The defense had requested five months of probation. The sentencing guidelines stipulate a prison sentence of between 12 and 18 months.
“I'm sorry,” Chow told US District Judge Richard Jones before receiving his sentence.
“I think the first step to taking responsibility is to fully acknowledge mistakes,” Zhao reportedly said in court. “Here I failed to implement an appropriate anti-money laundering program…and I now realize the seriousness of that mistake.”
In November, Zhao, known as “CZ,” struck a deal with the US government to resolve a multi-year investigation into Binance, the world’s largest cryptocurrency exchange. As part of the settlement, Zhao stepped down as CEO of the company.
Although he no longer runs the company, Zhao is widely said to own an estimated 90% stake in Binance.
The scope of his alleged crimes included intentionally failing to implement an effective anti-money laundering program as required by the Bank Secrecy Act, and allowing Binance to process transactions involving the proceeds of illegal activity, including between Americans and individuals in sanctioned jurisdictions.
The US ordered Binance to pay $4.3 billion in fines and forfeitures. Zhao agreed to pay a $50 million fine.
FTX founder and former CEO, Sam Bankman Fried, is also serving time in federal prison in the United States. Bankman-Fried, who was convicted of all seven felony charges against him in November, was sentenced to 25 years in prison in March on the securities charges. A fraud conspiracy took down his cryptocurrency exchange and related hedge fund, Alameda Research. Bankman Fried was also ordered to pay $11 billion in forfeiture in the ruling in Manhattan federal court.
Unlike Zhao, Bankman-Fried did not cut a deal with the government. Instead, other members of his executive rank cooperated with prosecutors. Carolyn Ellison, the former CEO of Alameda and Bankman-Fried's ex-girlfriend, was a star witness for the government during his criminal trial.
— CNBC's Jim Forkin contributed to this report.
