Changpeng “CZ” Zhao, the founder and former chief executive officer of Binance Holdings Ltd., the world’s largest cryptocurrency exchange, has been sentenced to four months in prison for willfully failing to implement an effective anti-money-laundering program as required by the U.S. Bank Secrecy Act.

CZ was sentenced after he pled guilty to the charge following a November settlement between Binance and the U.S. government. The settlement included a payment of $4.3 billion to settle charges for breaking sanctions and money-transmitting laws. As part of that settlement, CZ also stood down as CEO and paid a fine of $50 million.

The prison sentence was the decision of District Judge Richard Jones in Seattle. Lawyers for CZ had argued that he deserved no prison time as no one had served prison time before for breaching the Bank Secrecy Act, while lawyers for the Department of Justice had asked for a three-year sentence.

Notably, CZ had voluntarily presented himself to the court despite living in the United Arab Emirates, a country that does not have an extradition treaty with the U.S. CZ is also not a U.S. citizen but a citizen of Canada.

In a letter to the court, CZ wrote that “there is no excuse for my failure to establish the necessary compliance controls at Binance,” and “I wish I could change that part of Binance’s story.” He added that “but under my direction, Binance has now implemented the most stringent anti-money-laundering controls of any non-US exchange, and those controls have been in place since 2022.”

Among the allegations against Binance was that CZ prioritized his company’s growth over compliance, allowing Binance to circumvent regulations that apply to financial institutions servicing U.S. customers, Bloomberg reports. The lack of an AML program is then said to have led to malicious actors, including hackers and terrorist groups such as al-Qaeda and ISIS, trading bitcoin on the Binance platform.

Aside from the fine and implementing strict AML restrictions and other regulatory requirements, Binance remains mostly unaffected by the investigation and ruling. According to CNBC, the exchange saw a trading volume of $18.1 trillion in 2023, although its market share of the overall crypto trading market has dropped slightly to 41.6%, down 1.4 points since CZ stepped down as CEO late last year.

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