Binance’s ex-CEO begins prison sentence in California

Changpeng Zhao, Binance’s millionaire founder, has reported to a low-security federal jail in Lompoc, California. CNBC contacted Zhao’s defense team at Latham & Watkins to confirm that the former cryptocurrency CEO is now in jail.

Zhao was sentenced to four months in prison in April after pleading guilty to allowing money laundering at his cryptocurrency exchange.

The former Binance chief’s sentence was much shorter than the three years sought by US prosecutors. The defense has requested five months of probation. The sentencing recommendations recommended a prison term of 12 to 18 months.

“I’m sorry,” Zhao told U.S. District Judge Richard Jones before being sentenced, according to Reuters.

“I believe the first step in accepting responsibility is to fully acknowledge the mistakes,” Zhao reportedly stated in court. “I failed to create an effective anti-money laundering program. I see now how serious that mistake was.”

In November, Zhao, also known as “CZ,” reached an agreement with the US government to end a multiyear probe into Binance, the world’s largest cryptocurrency exchange. As part of the settlement, Zhao resigned as CEO of the company.

Zhao is commonly claimed to own an estimated 90% of Binance, despite the fact that he is no longer the company’s CEO.

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 illegal activity, including between Americans and individuals in sanctioned jurisdictions.

The United States has ordered Binance to pay $4.3 billion in fines and forfeiture. Zhao has agreed to pay a $50 million fine.

Sam Bankman-Fried, FTX’s founder and former CEO, is also doing time in federal prison in the United States. 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 brought down his cryptocurrency exchange and a connected hedge fund, Alameda Research. Bankman-Fried was also forced to pay $11 billion in forfeiture at his sentencing in Manhattan federal court.

Unlike Zhao, Bankman-Fried did not reach an agreement with the government. Instead, other members of his executive team collaborated with prosecutors. Caroline Ellison, Alameda’s former CEO and Bankman-Fried’s ex-girlfriend, was a key witness for the government in his criminal trial.

— CNBC’s Jim Forkin contributed to this story.