How does a high-profile crypto founder recover his reputation after serving prison time? Changpeng "CZ" Zhao's answer: He doesn't have to.
The founder of the Binance crypto exchange represents the rarest of statistics — a billionaire who has been imprisoned, and the only person to ever serve time solely for Bank Secrecy Act violations. But he said that he's never lost a prospective business partner because of his guilty plea.
"Once we can explain, 'Look, this is the Bank Secrecy Act, this is the violation; there's no fraud.' Many people confuse that, right?" he told CoinDesk in an interview. "But once they understand … they actually trust you more."
CZ, 49, is looking now toward his post-prison, post-CEO working life, and the millions of crypto fans he'd cultivated are keenly interested in his next steps. They might be disappointed in the short term, though, because he insists he doesn't want to return to Binance at this stage and has no interest in running its separate U.S. operation. That leaves him as a pure investor and adviser, searching for startup adventures.
The 17th richest person in the world, according to the Forbes billionaires tally, said he has little interest in making money for the sake of money. As the Canadian minds the slower-paced operation of his investment interests and keeps close tabs on the bulk of his wealth at Binance, his forward motion is colored by his complex relationship with the U.S., where so much of the crypto sector's energy is focused.
He said he's learned from his earlier compliance missteps and doesn't hold any grudges for his U.S. prison experience. But there's no doubt it blew up the crypto giant's earlier trajectory.
The trouble started years ago, when the younger digital assets entrepreneur started Binance, and its instant growth catapulted it into position as the leading global platform. He said he had little idea how to manage the legal side of his business, and he had a fatal blind spot about U.S. money-laundering and sanctions rules.
"I should have spent more time to learn about it much earlier on, but I was not living in the U.S. We started this platform in Shanghai, and then we moved to Malta, Singapore, etc.," he said. "So I didn't realize at the time that U.S. laws actually apply globally."
The U.S. Justice Department's accusations in 2023 were severe, saying he and his company failed to take basic steps to guard against money laundering and sanctions violations and offered an unfettered conduit for criminals to stash proceeds from "ransomware variants, darknet transactions, and various internet-related scams."
"Changpeng Zhao made Binance, the company he founded and ran as CEO, into the largest cryptocurrency exchange in the world by targeting U.S. customers, but refused to comply with U.S. law,” said then-Acting Assistant Attorney General Nicole Argentieri. “Binance’s and Zhao’s willful violations of anti-money laundering and sanctions laws threatened the U.S. financial system and our national security, and each of them has now pleaded guilty.
He made the plea deal and was sentenced to serve four months in federal prison — an unusual punishment for a pure BSA rap, for which a similar conviction earned former BitMex CEO Arthur Hayes only home confinement. Fellow high-profile founder Sam Bankman-Fried of the failed FTX exchange is also serving time, but his sentence was rooted in fraudulent activity.
"You ask anybody who went to prison, they always say like the sentence was too harsh, right?" CZ said. "I think the judge is a really good person, whether he was under any perceived or indirect or just atmospheric pressure at the time, we don't know, but you know he had the right to do it, and I respect it, so this is water under the bridge."
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