As a researcher with a background in law and experience in the crypto industry, I believe that Changpeng “CZ” Zhao’s prison sentence for money laundering serves as a clear message to the entire crypto industry. The judge’s emphasis on general deterrence sends a strong signal that compliance with Anti-Money Laundering (AML) regulations is non-negotiable.
According to lawyer Dr. Aaron Lane, the imprisonment of Binance founder Changpeng “CZ” Zhao for money laundering over a four-month period seems intended as a strong warning to the crypto industry: ‘Obtain compliance with regulations.’
The primary reason for the length of the prison sentence seems to be general deterrence, according to Lane, a senior law lecturer at Melbourne’s RMIT Blockchain Innovation Hub, as expressed in an interview with CryptoMoon.
“The judge has sent a message, not to CZ individually but to the entire industry, that Anti-Money Laundering compliance must be taken seriously.”
Lane stated that the U.S. had a valid reason for filing charges against Zhao, who admitted guilt on April 30 for not sufficiently managing his Anti-Money Laundering protocols.
Although the accusations were significant, they primarily involved regulatory issues rather than outright fraud, as was the case with Sam Bankman-Fried’s conviction resulting in a 25-year sentence.
Zhao received a four-month prison term, which was lighter than the suggested 18-month sentence based on the nature of his offense. This term was significantly shorter than the U.S. prosecutors’ three-year imprisonment proposal, which the judge reportedly found excessive.
With a plea deal in place, which meant Zhao waived his right to challenge any sentence below 18 months, judges still held significant power to determine a fair verdict.
“CZ pleaded guilty, accepted responsibility, and had already paid a high price in resigning as CEO and accepting a $50 million fine.”
David Chung, the founder of Creo Legal law firm, shared with CryptoMoon his perspective: Placing Zhao in prison signifies a definitive message to the cryptocurrency sector that the unregulated era has come to an end.
As a researcher, I came across an intriguing observation made by Chung. He pointed out that Zhao admitted guilt solely for violating Anti-Money Laundering laws, and not for laundering money or any other criminal activity.
“A prison sentence may be going too far, and a substantial fine and CZ’s resignation may be more appropriate, which is what Binance has already agreed to.”
“I will do my time” — CZ
After Zhao’s sentencing hearing, he turned to X to express his gratitude towards his supporters. He assured them that he would serve his prison term and emphasized the significance of adhering to current laws.
He expressed his intention to serve out his sentence, finish this stage of his life, and shift his attention towards the next phase of his educational journey.
In March, Zhao revealed his intentions to initiate an educational venture, presumably focusing on blockchain technology and cryptocurrencies.
“Our industry has entered a new phase,” Zhao added. “Compliance is super important.”
The former Binance chief acknowledged that despite the scrutiny the platform faced, the users’ funds remained secure, which he described as a positive outcome of the situation.
The Securities and Exchange Commission (SEC) is pursuing a lawsuit against Zhao, with accusations that he misused Binance customers’ funds. However, Binance has released a statement refuting these allegations.
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2024-05-01 09:40