Benjamin Naftalis, a legal representative for Changpeng Zhao, the former CEO of Binance, stated that there is an absence of precedent for defendants sentenced to prison time for violations of the Bank Secrecy Act (BSA). This statement was made in a court filing ahead of Zhao's sentencing hearing on April 30, where he received a four-month prison sentence.
"Mr. Zhao has paid massive fines," said Naftalis. "He directed the Company to plead guilty before this Court and to resolve related civil charges with three federal agencies. These factors strongly favor lenience. No defendant in a remotely similar BSA case has ever been sentenced to incarceration."
Zhao, often referred to as CZ, was sentenced after pleading guilty to violating the BSA due to inadequate anti-money laundering controls at Binance. As reported by The Verge, he also paid a $50 million fine for this violation. Although federal sentencing guidelines suggest 18 months in prison for such offenses, Judge Richard Jones highlighted that CZ had accepted responsibility for his actions and seemed unlikely to reoffend. Jones also noted that CZ has no prior criminal offenses and has taken "extraordinary steps and significant steps" in cooperating with law enforcement.
According to Phillip Shoemaker, executive director of Identity.com, it was surprising that CZ received a prison sentence given the substantial fines already paid by him and Binance. As reported by Cryptonews, Shoemaker expressed concerns about the fairness of the situation considering the billions already paid out in fines. He said, "If the industry wants to be honest with itself, nobody was doing AML [anti-money laundering] back in the day. But this clearly has changed for the better in recent years." Shoemaker suggested that CZ's sentence could indicate potential government action on past offenses considered settled.
Calvin Cheng, formerly an appointed member of Singapore's parliament, compared CZ's case with those involving CEOs of major traditional banking institutions. In a post on X, Cheng noted that these bank executives had been fined for compliance failures similar to those committed by CZ and Binance but were not charged with crimes or sentenced to prison time. He cited BNP Paribas and UBS as examples of banks fined for compliance failures without their leadership facing criminal charges.
In 2014, the U.S. Department of Justice (DOJ) issued a press release stating that BNP Paribas (BNPP) was fined $8.97 billion for conspiring to violate the International Emergency Economic Powers Act and the Trading with the Enemy Act. The DOJ found that BNPP had "knowingly and willfully" moved $8.8 billion through the U.S. financial system on behalf of sanctioned entities, using third-party institutions to conceal its role in illegal payments. Despite this, no executives of the bank faced criminal charges.
According to Investopedia, CZ was born in China but moved to Canada at a young age after his father was exiled due to his intellectual views. Before launching Binance in 2017, he held various roles in the financial sector. The exchange now has a daily trading volume of $76 billion and serves 90 million users worldwide.