Changpeng Zhao, commonly known as CZ, is the founder and former CEO of Binance, the world’s largest cryptocurrency exchange. In November 2023, Zhao acknowledged violating the Bank Secrecy Act (BSA) because he failed to implement a strong anti-money laundering program at Binance. This admission was part of a broader legal scenario that involved multiple charges against both Zhao and several Binance entities, accused by the U.S. Securities and Exchange Commission (SEC) of various 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.
In accordance with our guide on how much time one can expect to serve in federal prison, Zhao will serve the entirety of his four-month sentence in federal prison. This is informed by Zhao’s sentence and considers the following:
- Zhao is eligible to receive Good Time Credits but will not receive them due to the length of his sentence.
- 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), nor would it help in this case.
- Zhao is not eligible to report to a minimum-security prison camp facility because he is not a citizen of the United States. He will serve his time in a low-security facility.