Changpeng Zhao, commonly known as CZ, is the founder and former Chief Executive Officer of Binance, the world’s largest cryptocurrency exchange platform. In November 2023, Zhao faced significant legal troubles when he pleaded guilty to violating the Bank Secrecy Act (BSA) by failing to implement an effective anti-money laundering program at Binance. This plea was part of a broader legal case involving multiple allegations against Zhao and Binance entities, which the U.S. Securities and Exchange Commission (SEC) has charged with a variety of securities law violations.
The SEC’s charges against Zhao and Binance include operating unregistered national securities exchanges, broker-dealers, and clearing agencies, as well as the unregistered offer and sale of Binance’s own crypto assets. The SEC alleges that Zhao and Binance misled investors about their risk controls and trading volumes, while actively concealing their operations and manipulative trading practices. According to SEC Chair Gary Gensler, Zhao and Binance engaged in an “extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law.” This situation represents a significant breach of trust in the cryptocurrency market and raises questions about the regulation and oversight of digital currencies.
As for the sentencing of Changpeng Zhao, it is currently uncertain. Zhao must remain in the continental United States ahead of his sentencing, and we know he faces a maximum prison sentence of 18 months under federal guidelines. As part of his agreement with the government, he has agreed not to appeal any sentence up to that length and he has reportedly been cooperative and remorseful, unlike FTX founder Sam Bankman-Fried. A Justice Department spokesperson shared they will take an official position on how much jail time to seek closer to sentencing, which is currently scheduled for February 2024.
Ahead of sentencing, here are some notes to consider regarding how much time CZ will spend in prison, in accordance with our guide on how much time one can expect to serve in federal prison:
- Zhao is eligible to receive Good Time Credits.
- Zhao is not eligible to earn First Step Act Earned Time Credits, as he is a citizen of Canada and the United Arab Emirates and not a citizen of the United States.
- Zhao is not eligible to receive any benefit from participation in the Residential Drug Abuse Program (RDAP).
- CZ’s actual time in prison will be a straight-forward calculation, as it can only include the 15% discount for Good Time Credits.
It is expected Changpeng Zhao will be sentenced to 18 months in federal prison which will result in a post-Good Time Credits total of 15.3 months.
This post will be updated following CZ’s sentencing in February 2024.