Changpeng Zhao’s 4-month sentence is a ‘total deterrent’, said a lawyer

Binance founder Changpeng “CZ” Zhao's four-month prison sentence for anti-money laundering appears to be an act of “general deterrence”, the judge said, sending a clear message to the crypto industry's compliance, lawyer Aaron Lane.

“The main reason behind the jail time seems to be a general ban,” Lane, a law professor at the RMIT Blockchain Innovation Hub in Melbourne, told Cointelegraph.

“The judge sent a message not to CZ individually, but to the entire industry that anti-money laundering compliance must be taken seriously.”

On April 30, the United States said it was “justified” to prosecute Zhao for failing to maintain an effective anti-money laundering program.

While the charges were serious, they were “regulatory in nature” and did not directly compete with FTX founder Sam Bankman-Fried's fraud charges, which led to a 25-year prison sentence.

Zhao's four-month sentence, however, was below the 18-month sentencing guideline for the crime and well below the U.S. attorney's request for three years in prison, which the judge criticized as “too harsh,” Lane said.

Lane noted that even in the plea bargain – in which Zhao agreed not to receive a sentence of less than 18 months – jurors had “wide discretion to reach the right sentence.”

“CZ pleaded guilty, accepted responsibility and has already paid a heavy price by resigning as CEO and accepting a $50 million fine.”

Law firm founder David Chung told Cointelegraph that Zhao's jailing is a clear signal to the industry that the Western days of crypto are over.

But Chung Zhao said he was “only accused of failing to comply with anti-money laundering regulations, saying he did not embezzle money or commit any other crime.”

“A prison sentence may be too far, and a hefty fine and CZ's resignation may be more appropriate, which Binance has already agreed to.”

“I will do my time” – CZ

Meanwhile, Zhao went to X following his sentencing hearing to thank his supporters, stressing that he will serve his time in prison and the importance of obeying the law.

“I will bide my time, complete this chapter and focus on the next chapter of my life (education),” he wrote.

In March, Zhao announced plans to launch an educational project centered around blockchain and crypto.

Related: CZ Judged: A Timeline of Binance's US Legal Battles

“Our industry has entered a new phase,” Zhao added. “Compliance is extremely important.”

The former Binance boss said that the “silver lining” of the saga is that Binance user funds are “SAFU” – safe – even though the crypto exchange has been “under the microscope”.

Zhao and Binance are still facing charges from the US Securities and Exchange Commission alleging that Zhao misappropriated Binance's customer funds — a charge Binance denies.

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