.svg)
Changpeng Zhao walks free in California, the UK secures its first conviction for illegal crypto ATM offences, and Sweden labels most crypto exchange providers "professional money launderers".
The founder and former CEO of Binance is a free man once again after spending four months in a federal prison in California.
Due to the end of his sentence falling on a weekend, Changpeng Zhao was allowed to leave Lompoc II in Santa Barbara two days early, as per US Bureau of Prisons (BOP) regulations.
In April, Zhao was sentenced to four months in prison after pleading guilty to one criminal count of violating the Bank Secrecy Act (BSA).
Prosecutors argued that Binance had grown to become the world’s largest crypto exchange through a strategy of regulatory arbitrage devised by Zhao as CEO.
In communications obtained by the Department of Justice (DOJ), Zhao had told Binance employees that it is “better to ask for forgiveness than permission” from regulators in the markets where the company operates.
Zhao admitted to failing to implement and maintain an effective anti-money laundering (AML) programme between Binance’s founding in 2017 and at least October 2022.
In his with the DOJ, the crypto billionaire is said to have prioritised Binance’s “growth, market share and profits” over compliance with US laws.
“Binance facilitated billions of dollars of cryptocurrency transactions without implementing appropriate know your customer (KYC) procedures or conducting adequate transaction monitoring,” said the DOJ.
“As a result of the defendant’s wilful failure to implement an effective AML program, Binance processed transactions involving proceeds of illegal activity and caused transactions between US persons and persons in sanctioned jurisdictions.”
In addition to the custodial sentence, Zhao agreed to step down as Binance CEO and pay a $50m fine to the DOJ.
He is now permanently barred from “managing or operating” any Binance entity, although he retains his position as the largest shareholder in the company and its many subsidiaries.
by the US Commodity Futures and Trading Commission (CFTC): “Binance operates the world’s largest centralised digital asset exchange, emerging through an opaque web of corporate entities, all of which are ultimately controlled by Zhao.”
In a separate civil suit brought by the CFTC, ܳ to pay a $150m fine to settle charges of “wilful” evasion of the Commodity Exchange Act (CEA) and operating an illegal derivatives exchange.
Nonetheless, earlier this year, put Zhao’s current net worth at $59.9bn, while ranked Zhao as the 67th richest person in the world, with a net worth of $27.6bn.
Justice served?
Zhao’s four-month sentence was widely seen as a sweetheart deal, given the scale of Binance’s corporate settlement with the DOJ and the seriousness of the charges against the company.
In November 2023, as covered by Vixio, Binance agreed to pay a record-breaking criminal fine of $4.3bn to settle charges of AML failures, unlicensed money transmitting and sanctions violations.
The Treasury’s Office of Foreign Assets Control (OFAC) more than 1.6m apparent violations of US sanctions by Binance, including almost $900m of transactions between US users and residents of Iran.
Dennis Kelleher, co-founder and CEO and financial reform advocate Better Markets, described Zhao’s sentence as an “egregious” miscarriage of justice.
“The DOJ didn’t even charge Zhao with money laundering; he was only charged with not having an AML program. That’s less than a slap on the wrist,” he .
“Laundering the proceeds of crime paid off fabulously for Zhao, and sends exactly the wrong message to criminals worldwide.”
ܳ to his X account one day after leaving prison, telling his 8.9m followers that food on the outside “tastes so good” and that it’s a “luxury” to have more than one piece of fruit a day.
He also said he plans to “chill for a bit” and then focus on the Giggle Academy, his online education platform, as well as his investments in blockchain, AI and biotech.
UK nets first conviction for illegal crypto ATMs
The UK’s Financial Conduct Authority (FCA) has successfully its first case against an individual charged with operating a network of illegal crypto ATMs.
Olumide Osunkoya, 45, a Nigerian resident in London, pleaded guilty to five offences in total, including creating and using false documents and possession of criminal property.
According to the FCA, Osunkoya ran a network of at least 11 crypto ATMs, which processed more than £2.6m in crypto transactions between December 2021 and September 2023.
Despite being refused registration with the FCA in 2021, he continued to operate and grow the crypto ATM network in local convenience stores across the UK.
“Osunkoya completed no customer due diligence or source of funds checks on those who used the crypto ATMs,” said the regulator.
“The court heard evidence that those likely committing money laundering or tax evasion were using his machines. Osunkoya is suspected to have made substantial profit from the operation.”
Osunkoya is also the first person to be criminally prosecuted for unregistered crypto-asset activity under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs).
Sweden labels crypto exchanges 'professional money launderers'
from the Swedish Police Authority and the Financial Intelligence Unit (FIU) has found that the majority of crypto exchange providers meet the definition of “professional money launderers” (PMLs).
A PML is defined by the two agencies as someone who systematically launders money in return for payment.
Illicit crypto exchange providers are engaged in business activities that require registration with the Swedish Financial Supervisory Authority (FSA) and compliance with AML law, they said.
However, the two agencies said that their ability to sanction unlicensed crypto exchange providers is “limited” and “needs to be strengthened”.
