Only weeks ago, a Manhattan jury found disgraced FTX founder Sam Bankman-Fried guilty of seven counts of fraud and conspiracy, setting the fallen Silicon Valley darling up for a potentially lifelong stint in a brutal federal penitentiary. Will his longtime rival, Binance CEO Changpeng Zhao, end up behind bars as well? Today, Zhao agreed to a settlement with federal prosecutors that required him to plead guilty to violating criminal U.S. anti-money-laundering laws. This raises the possibility that the two wealthiest men in crypto’s history could become prison bunkmates.
While the ultimate decision as to Zhao’s carceral fate is now solely in the hands of the Seattle federal judge that accepted his guilty plea, violations of the Bank Secrecy Act, which Zhao pled guilty to, carry a maximum prison sentence of five years. However, there are several factors that suggest Zhao won’t be slapped with the maximum penalty. One, he was allowed to retain his majority ownership of Binance, and two, in similar past criminal cases regarding crypto and money laundering, prosecutors’ requests for substantial prison sentences have been rebuffed. Last year, for example, crypto executive Arthur Hayes pled guilty to violating the Bank Secrecy Act while leading crypto exchange BitMEX, and was sentenced to six months of house arrest and two years of probation.
Sources at the Justice Department told The New York Times Tuesday that the agency will seek an 18-month sentence for Zhao, though that’s no guarantee he’ll see the inside of a prison. Zhao himself indicated he doesn’t expect to go to prison in a Twitter post Tuesday, saying he plans to take a vacation and become a mentor to entrepreneurs. While Zhao may be headed for some combination of probation and potentially house arrest, Bankman-Fried looks set for a decades-long stint at a medium-security federal prison.
Edited by Andrew Hayward
You can read more about this topic here: Decrypt: Will Binance Founder Changpeng Zhao Go to Prison?