Binance's ex-CEO begins prison sentence in California

Binance's billionaire founder Changpeng Zhao has reported to a low-security federal prison in Lompoc, California. Our reached out to Zhao's defense team at Latham & Watkins to confirm that the former crypto chief is now in custody.

Zhao was sentenced to four months in prison in April after pleading guilty to charges of enabling money laundering at his crypto exchange.

The sentence handed down to the former Binance chief was significantly less than the three years that federal prosecutors had been seeking for him. The defense had asked for five months of probation. The sentencing guidelines called for a prison term of 12 to 18 months.

"I'm sorry," Zhao told U.S. District Judge Richard Jones before receiving his sentence, according to Reuters.

"I believe the first step of taking responsibility is to fully recognize the mistakes," Zhao reportedly said in court. "Here I failed to implement an adequate anti-money laundering program. … I realize now the seriousness of that mistake."

In November, Zhao, commonly known as "CZ," struck a deal with the U.S. government to resolve a multiyear investigation into Binance, the world's largest cryptocurrency exchange. As part of the settlement, Zhao stepped down as the company's CEO.

Though he is no longer running the company, Zhao is widely reported to have an estimated 90% stake in Binance.

The scope of his alleged crimes included willfully failing to implement an effective anti-money laundering program as required by the Bank Secrecy Act, and allowing Binance to process transactions involving proceeds of unlawful activity, including between Americans and individuals in sanctions jurisdictions.

The U.S. ordered Binance to pay $4.3 billion in fines and forfeiture. Zhao agreed to pay a $50 million fine.

FTX's founder and former CEO, Sam Bankman-Fried, is also serving time in federal prison in the U.S. Bankman-Fried, who was convicted on all seven criminal counts against him in November, was sentenced to 25 years in prison in March for the securities fraud conspiracy that doomed his cryptocurrency exchange and a related hedge fund, Alameda Research. Bankman-Fried was also ordered to pay $11 billion in forfeiture at the sentencing in Manhattan federal court.

Unlike Zhao, Bankman-Fried did not strike a deal with the government. Instead, other members of his C-suite cooperated with prosecutors. Caroline Ellison, Alameda's former CEO and Bankman-Fried's ex-girlfriend, was a star witness for the government during his criminal trial.

— Our's Jim Forkin contributed to this report.

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