Binance founder Changpeng “CZ” Zhao has reported to a federal prison in California, marking a historic moment as the richest person to ever be incarcerated in the U.S. Zhao will serve a four-month sentence for failing to implement proper know-your-customer (KYC) procedures at Binance, the world’s largest cryptocurrency exchange.
Zhao, a Canadian national, admitted guilt to violating the Bank Secrecy Act (BSA) in November. His sentence, handed down in April by a federal judge, is notably shorter than the three years sought by prosecutors but longer than the sentence of other crypto executives, such as former BitMex CEO Arthur Hayes.
With a net worth of $36.5 billion, Zhao’s imprisonment has made headlines worldwide. Besides his prison term, Zhao was fined $50 million and agreed to resign as Binance’s CEO. Binance, which also pleaded guilty to money laundering and sanctions violations, settled these charges earlier this year by paying $4.3 billion in fines to various federal regulators and appointing an independent compliance monitor.
Zhao will serve his sentence at Lompoc II, a low-security prison in Santa Barbara County, California. The facility, housing 2,160 inmates, is known for its less harsh conditions. Inmates at Lompoc II can work on an adjacent farm, engaging in activities such as growing produce and tending to livestock, which starkly contrasts with the severe conditions at the New York prison where former FTX CEO Sam Bankman-Fried is serving a 25-year sentence.
This case highlights the growing scrutiny and regulatory enforcement in the cryptocurrency industry, setting a precedent for the accountability of high-profile figures in the sector.