Ex-Binance CEO Changpeng Zhao Sentenced to Four Months Following Years of U.S. Investigations
Summary:
Ex-Binance CEO, Changpeng “CZ” Zhao, was sentenced to four months in prison on April 30 for violating U.S. anti-money laundering laws, following several years of U.S. authorities' investigations. Many agencies, including the Department of Justice, Securities and Exchange Commission, and Commodity Futures Trading Commission, had probed into Binance's operations since 2018. The scrutiny led to massive fines for Zhao and several executive departures from the company, with Zhao finally stepping down as CEO in November 2023.
On April 30, Changpeng “CZ” Zhao, the ex-CEO of Binance, was handed a four-month jail sentence in a Seattle courtroom for infringing U.S. anti-money laundering regulations, ending a prolonged inquiry by American officials. During the proceedings, Judge Richard Jones determined that there was insufficient proof indicating Zhao was aware of any illegitimate activities within Binance, thus dismissing the Department of Justice’s (DOJ) suggestion to extend the sentencing guideline from 10 to 16 months. The imposed sentence, which also included large monetary fines, may seem lenient considering the U.S authorities' six-year-long investigation into Zhao and his cryptocurrency organization. From 2018 to 2024, multiple agencies including the DOJ, the Securities and Exchange Commission (SEC), and the Commodity Futures Trading Commission (CFTC) repeatedly scrutinized Binance. Cointelegraph highlighted the sequence of events that led to Binance under heavy scrutiny over the recent years:
February 2018 saw an investigation launched by the DOJ into Binance's adherence to U.S. Anti-Money Laundering (AML) laws and sanctions. Prosecutors at the time were examining allegations related to unauthorised money transfers, conspiracy to launder money and criminal sanctions violations. In March of 2021, there was an additional investigation by the Commodity Futures Trading Commission into whether the company had offered crypto-related derivatives to U.S. clientele without duly registering with them.
February 2022 saw the SEC investigate Binance Holdings and Binance.US, scrutinizing their connections with trading companies Sigma Chain AG and Merit Peak and how these relationships were disclosed to users. In June 2022, another inquiry was launched into Binance Holdings’ 2017 initial coin offering (ICO) for potential unregistered securities sales.
In March 2023, Binance CEO Changpeng “CZ” Zhao, compliance head Samuel Lim, and the exchange were sued by the CFTC over seven counts of trading irregularities and market manipulation. Zhao denied these allegations, insisting that the crypto exchange did not engage in market manipulation for profit.
In May 2023, the DOJ launched another investigation into Binance for potential sanctions violations by allowing Russians to access the cryptocurrency exchange.
In June 2023, the SEC brought charges against Binance and CZ for violations of securities law, such as inadequate market oversight and potential wash trading.
By July 2023, the heavy investigations surrounding the crypto exchange resulted in multiple departures on Binance.US's team.
In August 2023, as the DOJ pondered fraud charges against Binance, they expressed worry about the potential impact of a bank run on consumers.
By September 2023, facing intense scrutiny, Binance.US laid off about 100 people, or one-third of its workforce, and its CEO at that time also left.
Finally, in November 2023, CZ renounced his CEO title following a $4.3 billion agreement with U.S. authorities and his replacement was Richard Teng. As part of a settlement over criminal and civil cases, Zhao pleaded guilty to a single felony charge, accepting his errors and taking accountability. As a final note, 68% of Runes have lost their value — Are they really an upgrade for Bitcoin?
Published At
4/30/2024 11:50:10 PM
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