Binance founder Changpeng “CZ” Zhao’s recent prison sentence for Anti-Money Laundering (AML) violations is seen as a move to deter the crypto industry from non-compliance, according to lawyer Aaron Lane. Lane, a senior law lecturer at Melbourne’s RMIT Blockchain Innovation Hub, stated that general deterrence was the primary reason behind the imprisonment term. He also expressed his support for the charges brought against Zhao by the United States, noting that they were justified. However, Lane emphasized that the nature of the charges against Zhao, related to regulatory issues, was different from those faced by FTX co-founder Sam Bankman-Fried, who was convicted of fraud and received a 25-year prison sentence.
Despite the seriousness of the charges, Zhao’s four-month sentence was lower than the recommended 18-month guideline for his crime and significantly less than the three-year jail term requested by U.S. prosecutors. Lane revealed that the judge criticized the prosecutors for their excessive request, believing it to be too harsh. He explained that judges have the authority to determine a fair sentence, even when a plea deal is involved, as was the case with Zhao.
Lawyer David Chung, the founding director of Creo Legal, acknowledged that Zhao’s imprisonment sends a clear message to the crypto industry that the era of unregulated practices is over. However, he clarified that Zhao only pleaded guilty to noncompliance with AML regulations and not to money laundering or any other crime.
In response to his sentence, Zhao took to social media to express his gratitude to his supporters and his commitment to serving his time in jail. He also highlighted the importance of adhering to existing laws and mentioned his plans to launch an education project related to blockchain and crypto.
Despite the ongoing legal battles faced by Binance, including the lawsuit filed by the U.S. Securities and Exchange Commission accusing Zhao of misappropriating customer funds, Zhao assured the public that user funds on the platform are safe. He stated that Binance has been under scrutiny but reassured users that their funds are secure.
Overall, the industry views Zhao’s prison sentence as a warning to the crypto sector to prioritize compliance. It signifies the beginning of a new phase where regulatory adherence is crucial.