To begin a four-month sentence for failing to safeguard the world’s largest crypto exchange against money laundering.
By Ava Benny-Morrison, Bloomberg4 Jun 2024 09:15
Binance founder Changpeng Zhao has reported to a federal prison in California to begin a four-month sentence for failing to safeguard the world’s largest crypto exchange against money laundering.
The former chief executive officer, the richest person to do time in a US federal lock up, will serve his punishment at Lompoc II, a low-security facility with an adjacent satellite camp in Santa Barbara county.
The 47-year-old Zhao — now identified as inmate 88087-510 — was destined for the Seatac federal detention center in Seattle because his status as a non-US citizen had seemingly 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 said.
“He will be perfectly fine at Lompoc low,” said Mangel, who has two clients currently at the prison. “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.”
Like the Metropolitan Detention Center in Brooklyn, FDC SeaTac largely houses inmates awaiting trial and sentence for crimes ranging from fraud to murder. The Lompoc prison has 2,160 inmates across the camp and main facility, according to the Bureau of Prisons website.
Zhao was sentenced to four months in April, far below the three years prosecutors had sought. Zhao, also known as CZ, is one of the sector’s most recognizable figures having turned Binance into a wildly successful exchange since it’s launch in 2017. He is worth approximately $36.5 billion, according to the Bloomberg Billionaires Index.
In an agreement with the US government last year, Zhao pleaded guilty to failing to implement an adequate anti-money laundering program at Binance, and voluntarily traveled to Washington state from his home in Dubai to surrender. 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.
Binance also pleaded guilty to banking law and sanctions violations and agreed to pay $4.3 billion to resolve the multi-agency probe.
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