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Crypto: Former Binance CEO Changpeng “CZ” Zhao Released Today After 4 Months in Prison

 

Found guilty of fraud and failure to meet various banking obligations, the founder of the world's largest crypto exchange is free today.

119 days. That’s the total time that Changpeng Zhao, aka “CZ,” the former boss of Binance, spent in a Californian prison cell after pleading guilty to fraud and failure to comply with anti-money laundering obligations while he was at the head of his crypto exchange. This conviction ended a saga that lasted several years, during which the company’s largesse was long documented by the press. The boss was conveniently residing in Dubai, an emirate without an extradition agreement with the United States. But faced with the legal pressure weighing on Binance, at the risk of being banned from American territory, Changpeng Zhao had chosen to surrender to the American authorities to finalize an agreement that would save the company’s sustainability in this territory.  A criminal record that does not prevent the Chinese-Canadian entrepreneur from embodying an icon for a large part of the clientele of the crypto platform - the largest in the world in terms of volume of financial exchanges -, as illustrated by his community of 8.8 million subscribers on X (former name of the social network Twitter).

Banned by this legal agreement from holding an executive position within Binance, “CZ” nevertheless remains the company’s largest shareholder. A billionaire (his fortune is estimated at between $30 and $60 billion, respectively by Bloomberg and Forbes), he has launched a new business from his prison: the creation of a free educational platform called “Giggle Academy”. The outlines of the project remain very vague for the moment, however, and it is still Binance’s colors that the entrepreneur displays on his social network.

Binance, a resilient leader in the face of growing competition

In his absence, Binance has acquired a new CEO, Richard Teng (interviewed last December in our columns) and has not really weakened: despite the progress of competitors such as Bybit or OKX, the crypto exchange is still the most used in the world.  However, it must face many uncertainties, particularly in Europe where the MiCA regulation will require it to obtain a license that it does not currently have, while American platforms such as Kraken, Coinbase and the European Bitpanda are actively preparing for this deadline. Furthermore, the institutionalization of the crypto sector attracts many investors to regulated products such as ETFs, which could eventually compete with traditional crypto exchanges, which do not benefit from this commercialization, with the exception of… Coinbase, which secures part of it on behalf of certain asset managers.

CZ, former Binance CEO, sentenced to 4 months in prison in the United States.

It's the end of a long crypto legal saga: one month after the 25-year prison sentence of the fallen former boss of FTX, Sam Bankman-Fried, it's the turn of his former competitor Changpeng Zhao, nicknamed "CZ", to be sentenced to 4 months in prison in the United States.

If the sentence of the former boss of Binance is much less severe than that of his counterpart, it is because the crimes are different: it is indeed for his platform's failure to comply with anti-money laundering obligations that the founder of the world's largest crypto exchange was convicted, and not for embezzlement, the main charge against "SBF". According to two investigations by the US Treasury, Binance customers were long able to carry out transactions there without their identity having been previously verified, failures that would have facilitated money laundering by terrorist groups.  In a letter to the court, Changpeng Zhao admitted the crime: "There is no excuse for my failure to establish the necessary compliance controls at Binance." However, the American justice system acknowledged that there was "no evidence that the defendant was ever informed" of this type of activity, which explains his short prison sentence.

In addition to this sanction, the former executive had already been fined $50 million. A relatively modest sum considering his fortune, estimated at more than $40 billion by the Bloomberg news agency. Replaced by Richard Teng at the head of Binance, “CZ” nevertheless remains a shareholder of the crypto exchange, still the leader of the sector with 49.7% of market share, according to Coingecko (compared to 9.7% for the runner-up Upbit). On social networks, he has already announced the creation of a new company, far removed from Binance, since it is an educational platform, called Giggle Academy.