Binance Co-Founder CZ to Be Released After 4-Month Prison Stint
Binance co-founder Changpeng Zhao, popularly known as “CZ” in the crypto world, is set to be released on Friday evening after serving a 4-month prison sentence for failing to maintain an effective anti-money laundering program.
Legal Troubles and Regulatory Scrutiny
Zhao’s legal woes began in 2021 when global regulators started investigating Binance for operating without proper licenses, running an unlicensed securities exchange, and failing to comply with Anti-Money Laundering (AML) standards. The exchange faced allegations of facilitating illegal trading practices, leading to warnings from financial regulators in various countries.
In 2023, the U.S. Commodity Futures Trading Commission (CFTC) filed a lawsuit against Binance, accusing the company of allowing U.S. residents to trade crypto derivatives without proper registration. The CFTC also alleged that Binance had inadequate Know Your Customer (KYC) and AML protocols under Zhao’s leadership, potentially facilitating illicit activities.
Conviction and Penalties
The Department of Justice (DOJ) later pressed charges against Zhao for operating an unregistered exchange and market manipulation. In 2024, Zhao was convicted, resulting in hefty fines and strict limitations on his involvement in Binance and the crypto sector.
Background and Role in Binance
Prior to founding Binance in 2017, Zhao worked at blockchain.info and served as the CTO at OKCoin. Binance quickly rose to prominence in the crypto market, attracting millions of users globally. However, its rapid growth and Zhao’s aggressive expansion strategies drew regulatory scrutiny and criticism.
Post-Release Restrictions
After his release, Zhao faces stringent limitations on his activities within Binance and the crypto industry. As part of his settlement, he is prohibited from holding executive or strategic roles within Binance, participating in day-to-day operations, or engaging in activities related to crypto exchanges or trading services for a specified period.
“While CZ is no longer managing Binance, we look forward to seeing his next steps,” a Binance spokesperson stated. “Under our current leadership, Binance has continued to thrive, exceeding 230 million users globally, and remains committed to leading the industry responsibly.”
Edited by Stacy Elliott.