Binance co-founder Changpeng Zhao, known as “CZ” in the crypto world, is scheduled to be released on Friday night, after spending 4 months in prison “to maintain an effective anti-money laundering program.”
Although the prison term officially ends on Sunday, according to prison rules, inmates whose official release date is set for the weekend or holiday can be released on the previous business day—unless conditions allow for more incarceration.
Although he is indeed in prison, Zhao will face strict restrictions on the volume of business established in 2017, his involvement with Binance, the world's largest cryptocurrency exchange.
Zhao's legal troubles began in 2021 as global regulators began investigating the exchange's operations.
The authorities have accused the company of conducting unauthorized securities exchanges, non-compliance with anti-money laundering (AML) standards and facilitating illegal trading practices without proper licences. Binance's extensive operations and decentralized nature have drawn warnings from financial regulators in several countries, including the UK's Financial Conduct Authority and Japan's Financial Services Agency.
In the year In March 2023, the US Commodity Futures Trading Commission (CFTC) filed a lawsuit against Binance, accusing the company of violating US federal law by allowing US residents to trade crypto derivatives without proper registration. The CFTC also alleged that the exchange under Zhao's leadership lacked Know Your Customer (KYC) and AML protocols and could facilitate illegal activities.
The Department of Justice (DOJ) later filed its own charges of unregistered exchanges and market manipulation. Zhao was finally convicted in 2024, which resulted in hundreds of millions in fines and placed strict conditions on his future participation in Binance and the crypto sector.
Before Binance, Zhao marked the crypto space before founding Binance.
With technology experience, he worked as Head of Development at blockchain.info and served as CTO at OKCoin. In the year In 2017, he co-founded Binance, which quickly became a major player in the crypto market, attracting millions of users worldwide.
However, Binance's rapid growth and Zhao's proven approach to expansion often cross regulatory boundaries.
Binance has been operating in various regions without the relevant licenses, attracting regulatory scrutiny and criticism. Despite several warnings from international regulators, Zhao said decentralized finance (DeFi) should operate independently of traditional financial regulations. However, this refusal led to legal problems, as a result of which he was found guilty and removed from the daily operations of Binance.
After his release, Zhao faced strict restrictions on his activities at Binance and the crypto industry in general. As part of the settlement, he is prohibited from playing any executive or strategic role in Binance and cannot participate in the day-to-day operations of the company, such as trading, marketing or regulatory affairs. In addition, Zhao has been banned from engaging in activities directly related to crypto exchanges or business services for a period of time.
“We are very happy that CZ is staying home with his family. Although he will not be able to manage or run Binance, we are excited to see what he does next,” a Binance spokesperson said in a note sent to Decrypt. “Since last year, Binance has grown to over 230 million users worldwide under the leadership of our current team, and we are proud to continue to lead the industry.”
Edited by Stacy Elliott.
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