- Former Binance CEO Changpeng “CZ” Zhao is not expected to serve prison time, per the latest betting odds.
- The Canadian national is facing prison time for anti-money laundering charges in relation to his time as the CEO of the popular cryptocurrency exchange.
- Zhao pleaded guilty to violating the American Bank Secrecy Act in a plea agreement on U.S. federal charges in November 2023.
Cryptocurrency exchange magnate Changpeng “CZ” Zhao, 47, is expected to avoid prison time when he is sentenced on anti-money laundering charges. This is according to the latest betting odds at the leading online bookie BetOnline.
The site offers odds of -800 for Binance’s co-founder and former CEO to remain out of prison when his sentence is announced on April 30. That equals an implied probability of 88.9% for Zhao to receive a sentence that doesn’t involve prison time.
The next likeliest scenario is for the executive to go to prison for under 18 months. At +200, Zhao’s odds of serving a sentence in federal prison at under 18 months is 33.3%.
Fortunately for him, he is only +800 to go behind bars for more than 18 months. That’s just an 11.1% chance of happening later this month.
Zhao Pleads Guilty In Plea Agreement
In November 2023, the Department of Justice and Zhao agreed to a plea deal in exchange for pleading guilty. The agreement included him stepping down as Binance CEO and not operating the cryptocurrency exchange for three years. Richard Teng was promoted from senior executive to Binance CEO in the wake of the news.
Additionally, Zhao accepted a $50 million fine in the plea agreement. He and his lawyers also can’t make a public statement that “contradicts the acceptance of responsibility”.
Zhao ultimately pled guilty to one charge: “violating and causing a financial institution to violate” the Bank Secrecy Act. Binance also pled guilty, agreeing to forfeit $4 billion in fines.
The charges stem from Zhao and Binance failing to maintain an effective anti-money laundering program. This is what Chef Jim Lee of the IRS Criminal Investigation had to say.
When you put growth above compliance, you end up in hot water. Our team of investigators uncovered that Binance disregarded anti-money laundering Know Your Customer laws, failed to register as a money transmitter, and willfully violated U.S. sanctions tied to the International Emergency Powers Act. When you do so, your business becomes a playground for bad actors. Hundreds of millions of dollars in illicit proceeds from ransomware variants, darknet transactions, and various internet-related scams moved through Binance in an attempt to evade detection by law enforcement.
Binance Ignores Know Your Customer Policies
Binance, founded in 2017, did not implement any Know Your Customer procedure for customers. With Zhao and the company failing to recognize who was making transactions on the website, the DOJ took notice of the illegal activity.
Court documents reveal that it was important for Binance to attract and retain “VIP” customers, who were responsible for millions of dollars in transactions. In turn, Binance collected fees from these wealthy users.
According to Chairman Rostin Behnam of the Commodity Futures Trading Commission (CFTC), Binance collected $1.35 billion in trading fees from American customers on the cryptocurrency platform.
As well as Binance not screening customers properly, the company didn’t register with FinCEN as a money service company.
Zhao Faces Up To 10 Years In Prison
Although the odds favor Zhao receiving no prison time at all, sentencing guidelines allow the judge to send the businessman behind bars for up to 10 years.
It’s unlikely that Zhao will receive such a sentence, but it would be the maximum punishment for his crimes. The plea agreement did not specifically include any type of reduced sentence to avoid prison. However, his willingness to cooperate with prosecutors should work in his favor.
In March, FTX founder Sam Bankman-Friedman was sentenced to 25 years in prison. He was convicted of fraud and conspiracy for defrauding investors on his well-known cryptocurrency exchange. If Zhao is sentenced to a prison term, the cryptocurrency industry would see two of its most early influential figureheads behind bars. Nevertheless, the odds suggest that Zhao won’t be wearing an orange jumpsuit on April 30.
