Binance's billionaire founder Changpeng Zhao has reported to a low-security federal prison in Lompoc, California. CNBC has contacted Zhao's defense team at Latham & Watkins to substantiate that the previous crypto chief is now in custody.
Zhao was sentenced to 4 months in prison in April after pleading guilty to facilitating money laundering on his crypto exchange.
The sentence against the previous Binance boss was significantly lower than the three years that the federal prosecutor had demanded for him. The defense had demanded five months probation. The sentencing guidelines called for a jail sentence of 12 to 18 months.
“I'm sorry,” Zhao told U.S. District Judge Richard Jones before announcing his verdict, in response to Reuters.
“I believe the first step to taking responsibility is to fully acknowledge the mistakes,” Zhao said in court. “Here I failed to implement an adequate anti-money laundering program. … I now recognize the seriousness of that mistake.”
In November, Zhao, commonly generally known as “CZ,” struck a take care of the U.S. government to finish a multi-year investigation into Binance, the world's largest cryptocurrency exchange. As a part of the settlement, Zhao resigned as the corporate's CEO.
Although he now not leads the corporate, Zhao reportedly owns an estimated 90% stake in Binance.
The crimes he’s alleged to have committed include, amongst others, willfully failing to implement an efficient anti-money laundering program as required by the Bank Secrecy Act and allowing Binance to process transactions involving proceeds from illegal activities, including between Americans and individuals in sanctioned jurisdictions.
The US has fined and confiscated Binance $4.3 billion. Zhao agreed to pay a $50 million positive.
FTX founder and former CEO Sam Bankman-Fried can be serving a sentence in a U.S. federal prison. Bankman-Fried, who was found guilty on all seven counts in November, was sentenced in March to 25 years in prison for the securities fraud conspiracy that bankrupted his cryptocurrency exchange and a related hedge fund, Alameda Research. At sentencing in Manhattan federal court, Bankman-Fried was also ordered to pay an $11 billion positive.
Unlike Zhao, Bankman-Fried didn’t cut a take care of the federal government. Instead, other members of his senior management team cooperated with prosecutors. Caroline Ellison, Alameda's former CEO and Bankman-Fried's ex-girlfriend, was a key government witness during his criminal trial.
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