Binance founder, Changpeng Zhao begins 4-month sentence in US federal prison

David Afolayan
Binance founder Changpeng Zhao begins 4-month sentence in US federal prison
Changpeng Zhao, Binance co-founder. Photographer: Zed Jameson/Bloomberg.

Binance founder Changpeng Zhao (CZ) has begun his four-month sentence in a US federal prison. The former chief executive officer of the world’s largest crypto exchange will serve his time at the Lompoc II, a low-security facility with an adjacent satellite camp in Santa Barbara County, California.

According to the Bureau of Prisons website, Lompoc prison has 2,160 inmates across the camp and main facility. 47-year-old Zhao is the richest person to spend jail time in a US federal lockup with the inmate number 88087-510. According to the Bloomberg Billionaires Index, CZ is worth approximately $36.5 billion.

According to a Bloomberg report, Zhao was most likely sent to the Seatac federal detention centre in Seattle because his status as a non-US citizen had made him ineligible for a less restrictive camp, the choice for most white-collar defendants.

But he was allowed to report to the cushier, minimum-security prison at Lompoc, where inmates work on horse farms and spend most of the day outside. Prison consultant, Sam Mangel who has two clients currently at the prison believes that the crypto founder will “be perfectly fine” at the Lompoc low.

changpeng zhao
Changpeng Zhao

“There are a lot of experiences that other inmates will be thirsty to hear about, especially in crypto. Now you have this guru coming in and being able to teach or educate them”, Mangel said.

Similar read: All you need to know about the Binance drama that unfolded in the last 24 hours

The trials of Changpeng Zhao

Recall that last year, Zhao pleaded guilty to violating the Bank Secrecy Act after federal officials alleged he directed Binance to allow United States customers to use the platform without conducting proper know-your-customer or anti-money laundering checks. He voluntarily travelled to Washington from his home in Dubai to surrender to face a court trial.

In the end, Zhao was sentenced to four months in April. This was far below the three years prosecutors had sought. They claimed that the lack of an AML program allowed illicit actors, including crypto mixers, hackers and terrorist groups including al-Qaeda and ISIS, to trade Bitcoin on the platform.

Richard Teng - Binance CEO
Richard Teng – Binance CEO

Binance also pleaded guilty to banking law and sanctions violations and agreed to pay $4.3 billion to resolve the case. CZ, who founded the exchange in 2017, was succeeded by Richard Teng, who previously oversaw the exchange’s regional business outside the United States.

Zhao, also known as CZ, is one of the sector’s most recognizable figures having turned Binance into a very successful exchange.

Like CZ, Like Bankman Fried

Recall that following a similar, the founder of crypto exchange platform, FTX, Sam Bankman-Fried (SBF) was sentenced to 25 years in prison by a judge today for stealing $8 billion from customers’ funds.

A New York District Judge, Lewis Kaplan handed down the sentence at a Manhattan court hearing after rejecting Bankman-Fried’s claim that FTX customers did not lose money. The judge also accused him of lying during his trial testimony. 

SBF was found guilty of two counts of wire fraud, two counts of wire fraud conspiracy, one count of securities fraud, one count of commodities fraud conspiracy and one count of money laundering conspiracy. The 32-year-old former CEO had been found guilty by a jury in November on seven counts of fraud and conspiracy which led to FTX’s 2022 collapse.

Binance founder Changpeng Zhao begins 4-month sentence in US federal prison

Federal prosecutors had sought a prison sentence of 40 to 50 years. His crimes each carry a maximum sentence of between five and 20 years in prison with the wire fraud, wire fraud conspiracy and money laundering conspiracy carrying a maximum 20-year sentence. Bankman-Fried’s defense lawyer Marc Mukasey had argued that a sentence of less than 5-1/4 years would be appropriate.

The sentence marked the culmination of Bankman-Fried’s plunge from an ultra-wealthy entrepreneur and major political donor to the biggest trial, so far, in a crackdown by U.S. authorities on malfeasance in cryptocurrency markets.

According to the Bureau of Prisons website, SBF has been returned to a Metropolitan Detention Center in Brooklyn New York jail, after being transported to Oklahoma and Pennsylvania last month.

Bankman-Fried was moved to a facility in Oklahoma in May, in what appeared to be a way station en route to a prison in California, where his parents live. Last week, he was transported to a prison in Pennsylvania, a brief stop on his way back to Brooklyn.

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