Binance Founder Changpeng Zhao to Be Released from Prison After 4 Months

Binance Founder Changpeng Zhao to Be Released from Prison After 4 MonthsChangpeng Zhao, former richest Chinese person and founder of Binance, is set to be released from prison in the United States and return to society. A reporter confirmed with the US Federal Bureau of Prisons that Zhao's current location has been updated to the Residential Reentry Management (RRM) facility in Long Beach, California, indicating he is undergoing pre-release preparation and assessments

Binance Founder Changpeng Zhao to Be Released from Prison After 4 Months

Changpeng Zhao, former richest Chinese person and founder of Binance, is set to be released from prison in the United States and return to society. A reporter confirmed with the US Federal Bureau of Prisons that Zhao's current location has been updated to the Residential Reentry Management (RRM) facility in Long Beach, California, indicating he is undergoing pre-release preparation and assessments. He is expected to be released on September 29th, if all goes according to plan.

RRM facilities, also known as "halfway houses," provide necessary assistance and support for soon-to-be-released prisoners to ensure a smooth transition back into society. This may include providing a safe, structured, and supervised environment, offering employment training, psychological counseling, housing arrangements, and financial management services.

In April, Zhao was sentenced to four months in prison by a federal court in Seattle, Washington, for money laundering allegations related to his cryptocurrency exchange. US District Judge Richard Jones told Zhao, "You had the ability, the resources, and the manpower to make sure you were complying with each and every regulation you failed to do it." While Zhao's lawyers requested a five-month probation sentence, he ultimately could not avoid prison time.

During Zhao's imprisonment, Bitcoin's price fluctuated by over $20,000. In April, when Zhao was incarcerated, Bitcoin reached a high of $71,000, eventually falling below $50,000 after significant volatility. Its current price stands at $63,192.

Zhao was born in Lianyungang, Jiangsu, China, and is a Chinese-Canadian entrepreneur. In 2017, he founded Binance, which quickly became a global cryptocurrency exchange offering trading services for over 150 cryptocurrencies. At the end of 2021, amid the surge of Bitcoin and other cryptocurrencies, Zhao's net worth reached $94.1 billion, making him the richest Chinese person at the time. According to Forbes, Zhao still holds assets exceeding $30 billion as of April 2024.

According to Securities Times' previous reports, Zhao and Binance admitted guilt in November 2023, and formally began serving their prison sentences in April 2024. In April 2024, a US district judge in Seattle sentenced Zhao to four months in prison for failing to implement an effective anti-money laundering framework, which resulted in Binance becoming a platform for cybercrime and terrorism. The sentence was significantly shorter than the three-year prison term suggested by prosecutors, but still not what Zhao's defense lawyers had hoped for; they appealed for probation.

In November 2023, the US Department of Justice announced that Binance, which operates the world's largest cryptocurrency exchange, Binance.com, admitted to engaging in alleged money laundering, unlicensed money transmitting, and sanctions violations, and agreed to pay a fine of approximately $4.3 billion. Simultaneously, Zhao, Binance's founder and CEO, admitted to failing to maintain an effective anti-money laundering program and resigned from his position as CEO.

As part of the plea deal, Binance agreed to forfeit $2.51 billion and pay a criminal penalty of $1.81 billion, totaling $4.32 billion in fines and forfeitures. Binance also agreed to retain an independent compliance monitor for three years to correct and strengthen its anti-money laundering and sanctions compliance programs.

After settling with the US Department of Justice, the Commodity Futures Trading Commission (CFTC) announced a $2.85 billion fine against Binance and Zhao in December 2023. Combined with the $4.32 billion settlement with the US Department of Justice, Binance and Zhao have now paid a total of $7.17 billion in fines.

Despite paying astronomical fines, the future of Binance and Zhao remains uncertain. Furthermore, the US Securities and Exchange Commission (SEC) is still investigating Binance's illegal activities. In June 2023, the SEC filed 13 charges against Binance entities and founder Zhao, including operating an illegal trading platform in the US; operating unregistered exchanges, broker-dealers, and clearing agencies; misusing customer funds; and unregistered offerings and sales of securities. In response to the SEC's allegations, Binance stated that the company is actively cooperating with the SEC's investigation and striving to address issues and resolve concerns of regulators with the hope of reaching a negotiated resolution to their inquiries.

Looking at the successive hefty fines from the US Department of Justice and CFTC, it is highly likely that Binance will also receive a fine from the SEC.

Zhao's release from prison is sure to attract widespread market attention. Whether he can bounce back from his prison experience and lead Binance out of its current predicament will be a key topic in the coming period. Binance will also need to face the ongoing SEC investigation, making its future development uncertain.