Changpeng Zhao

Changpeng Zhao
Born:	September 10, 1977 Jiangsu, China
Charges:	Violation of Bank Secrecy Act
Sentence:	4 months (pardoned)
Facility:	FCI Lompoc II
Status:	Pardoned

Changpeng Zhao (born September 10, 1977), commonly known by his initials CZ, is a Chinese-Canadian businessman and cryptocurrency entrepreneur who served four months in federal prison in 2024 for violating the Bank Secrecy Act tied to his role as founder and CEO of Binance, the world's largest cryptocurrency exchange. He received a presidential pardon from Donald Trump in October 2025.

Zhao pleaded guilty in November 2023 to failing to implement an adequate anti-money laundering program at Binance. The exchange processed transactions for criminal enterprises including terrorist organizations, ransomware operators, and sanctions evaders. As part of his plea agreement, Zhao stepped down as Binance's CEO and personally paid a $50 million fine. Binance itself paid $4.3 billion in penalties to various federal regulators, one of the largest corporate penalties in American history.

Zhao was pardoned by President Trump.

Summary

Changpeng Zhao built Binance from a startup in 2017 into the largest cryptocurrency exchange by trading volume. At its peak, the exchange processed more transaction volume than all other crypto exchanges combined. The company's growth was rapid. One of the wealthiest people in the world, he had a net worth estimated at over $60 billion in early 2022 before the market declined. Zhao cultivated a reputation as an entrepreneur focused on expanding access to finance through blockchain technology, and Binance's "CZ" became a prominent figure in the crypto industry.

Binance's rapid growth coincided with compliance failures. Federal prosecutors established that Zhao had prioritized expansion over compliance. He didn't implement the anti-money laundering (AML) and know-your-customer (KYC) programs that U.S. law required. This failure allowed Binance to be used for substantial illicit finance. Terrorists, sanctions evaders, ransomware operators, and other criminals used the platform to move funds with minimal scrutiny. While Zhao wasn't charged with directly running these crimes, his willful failure to implement required safeguards made them possible.

Zhao's four-month sentence, far below the three years prosecutors requested, received significant attention because he was one of the world's richest individuals to go to federal prison. He reported to FCI Lompoc II in California as inmate 88087-510, serving alongside inmates from far more modest backgrounds. His October 2025 pardon by President Trump erased the conviction entirely, sparking criticism from lawmakers including Senator Elizabeth Warren, who called the pardon an example of "corruption."

Early Life and Career

Early Life and Education

Changpeng Zhao was born on September 10, 1977, in Jiangsu province, China. His family emigrated to Vancouver, Canada, in the late 1980s, when Zhao was around twelve. As a teenager he helped cover household expenses by flipping burgers at McDonald's and working overnight shifts at a gas station.

Zhao studied computer science at McGill University in Montreal, earning a bachelor's degree. He then built a system for matching trade orders on the Tokyo Stock Exchange and later moved to Bloomberg's Tradebook unit, where he developed futures-trading software.

Entry into Cryptocurrency

Zhao became interested in cryptocurrency around 2013, reportedly after a poker game where someone described Bitcoin. He sold his apartment in Shanghai to buy Bitcoin and joined Blockchain.info (now Blockchain.com) as head of development. Later, he worked at OKCoin, a Chinese cryptocurrency exchange, as chief technology officer, gaining operational experience in the crypto exchange business.

Founding Binance

In 2017, Zhao founded Binance (a portmanteau of "binary" and "finance") with an initial coin offering (ICO) that raised $15 million. The exchange launched in July 2017 and grew rapidly, becoming the world's largest cryptocurrency exchange by trading volume within six months. Several factors drove its success. Low trading fees, a wide selection of cryptocurrencies, high liquidity, and global expansion all played a role.

Zhao operated Binance without a fixed headquarters, a strategy he described as "decentralized" but which critics called regulatory arbitrage. He deliberately avoided jurisdictions where the exchange would face stringent oversight. Binance's nominal headquarters moved from China to Japan to Malta and eventually the company claimed to have no headquarters at all. This complicated efforts by regulators worldwide to exercise jurisdiction over its operations.

By 2022, Binance processed more cryptocurrency trading volume than all other exchanges combined. Zhao's personal net worth was estimated at over $60 billion, making him one of the wealthiest people in the world. However, the exchange faced mounting regulatory scrutiny in multiple jurisdictions, with authorities questioning its compliance with anti-money laundering laws and other financial regulations.

Role in the FTX Collapse

Zhao's business decisions also played a direct role in the November 2022 collapse of FTX, the rival exchange run by Sam Bankman-Fried. Binance had held a stake in FTX and exited that position in 2021 in exchange for a mix of cash and FTX's own token, FTT. On November 6, 2022, Zhao announced on social media that Binance would liquidate its remaining FTT holdings, citing "recent revelations that came to light." The announcement triggered a run on FTX as customers rushed to withdraw funds, and FTX filed for bankruptcy five days later, on November 11, 2022.

The fallout wasn't contained to FTX. Binance's own token, BNB, fell alongside the broader market through that November as contagion fears spread across the industry, before stabilizing at a lower level in the following weeks.

BNB, Binance's own token, during the week Zhao's announcement set off the run on FTX. BNB fell from about $326 on November 1 to a low near $265 in the days that followed, before settling near $278 by November 15, a decline of roughly 15 percent as the fallout from the FTX collapse spread across the crypto market. → View the interactive chart at cryptocurrencycharts.com

Indictment, Prosecution, and Sentencing

Federal Investigation

U.S. federal authorities conducted a multi-year investigation. The Department of Justice, the Commodity Futures Trading Commission (CFTC), and the Treasury Department's Financial Crimes Enforcement Network (FinCEN) all participated. Investigators found that despite Binance's claims to serve only non-U.S. customers from its main platform, the exchange had actively solicited American users and processed billions of dollars in transactions involving U.S. persons without implementing required compliance programs.

The investigation identified several categories of illicit users. Binance's inadequate compliance had allowed the platform to be used by criminals, including:

• Terrorist organizations, including Hamas and al-Qaeda affiliates
• Ransomware operators who extorted victims and laundered proceeds through Binance
• Individuals and entities subject to U.S. sanctions, including in Iran, Cuba, and Russia
• Drug traffickers and other criminal enterprises

Internal communications cited by prosecutors showed that Binance employees, including senior compliance staff, were aware of these issues while the exchange prioritized growth over compliance. In one exchange cited by prosecutors, a compliance officer acknowledged that Binance was operating as "a fking unlicensed securities exchange in the USA."

Guilty Plea

On November 21, 2023, Changpeng Zhao pleaded guilty to one count of violating the Bank Secrecy Act by failing to implement an adequate anti-money laundering program at Binance. The charge carried a maximum sentence of ten years in prison, though sentencing guidelines called for a significantly lower term.

As part of the plea agreement, Zhao agreed to three key things. He'd step down as CEO of Binance. He'd pay a personal fine of $50 million. And he'd remain in the United States pending sentencing, even though he'd been living in Dubai.

Separately, Binance agreed to plead guilty to charges including money laundering, unlicensed money transmission, and sanctions violations. The company paid approximately $4.3 billion in penalties to various federal agencies, one of the largest corporate penalties in American history.

Sentencing

Zhao's sentencing hearing took place on April 30, 2024, before U.S. District Judge Richard Jones in Seattle. Prosecutors requested a sentence of three years in prison, arguing that Zhao had "willfully" violated the law and that a substantial sentence was necessary to deter similar conduct by other cryptocurrency executives. His defense team requested probation, arguing that he had no prior criminal history and had cooperated with authorities.

Judge Jones sentenced Zhao to four months in federal prison. This was significantly below what prosecutors sought but above the probation the defense had requested. The judge noted that there was "no evidence that the defendant was ever informed" of specific illegal transactions occurring on Binance, suggesting that Zhao's crime was one of omission rather than active facilitation of criminality.

In addition to prison time, Zhao was fined $50 million personally, separate from Binance's corporate penalties. At sentencing, Zhao apologized for his conduct, stating: "I am sorry for what happened. I take my responsibility seriously."

Prison Experience

Zhao reported to Federal Correctional Institution Lompoc II on June 1, 2024, to begin serving his four-month sentence. The facility sits in Santa Barbara County on California's central coast. It's a low-security federal prison that houses male inmates. Zhao was assigned inmate number 88087-510.

With a net worth estimated at approximately $33 billion at the time of his incarceration, Zhao entered prison as the wealthiest federal inmate in American history. This distinction generated significant media attention.

He completed his sentence and was released from federal custody on September 27, 2024, having served the full four months.

Presidential Pardon

On October 23, 2025, President Donald Trump issued a full pardon to Changpeng Zhao. The pardon erased his federal conviction entirely and removed the legal consequences of his federal conviction, restoring rights that had been affected by his felony conviction.

The pardon came approximately one year after Zhao's release from prison. It was announced as part of a broader set of clemency actions by President Trump, though the specific reasoning behind Zhao's pardon wasn't publicly detailed. The decision immediately sparked criticism from some lawmakers and observers.

Senator Elizabeth Warren, a longtime critic of the cryptocurrency industry, condemned the pardon as "corruption." She stated: "First, Changpeng Zhao pleaded guilty to a criminal money laundering charge." Warren and other critics argued that the pardon sent a troubling message about accountability for financial crimes and raised questions about the relationship between cryptocurrency industry figures and the administration.

The White House defended the pardon. Press secretary Karoline Leavitt said Zhao "was prosecuted by the Biden Administration in their war on cryptocurrency" and that prosecutors had sought a sentence "so outside sentencing guidelines that even the judge said he had never heard of this in his 30-year career."

Post-Release and Post-Pardon Activities

Following his release from prison and subsequent pardon, Zhao has remained active in the cryptocurrency industry, though no longer as CEO of Binance. He's made public appearances at industry events and maintained a significant social media presence, particularly on Twitter/X, where he has millions of followers.

He remains barred from serving as an executive at Binance under the terms of his plea agreement but has continued to hold a large ownership stake in the company. He has focused publicly on Giggle Academy, a free education platform he founded, and continues to comment on cryptocurrency policy.

Public Statements and Positions

At his guilty plea and sentencing, Zhao accepted responsibility for his conduct and expressed remorse, while the sentencing judge noted there was no evidence he had personally directed or known about specific illicit transactions on the platform.

Since his release and pardon, Zhao has been more measured in his public statements about the case, focusing publicly on Giggle Academy and continued commentary on cryptocurrency policy rather than revisiting the prosecution.

Terminology

• Bank Secrecy Act (BSA): U.S. federal law requiring financial institutions to maintain anti-money laundering programs and report suspicious transactions.

• Anti-Money Laundering (AML): Regulations and procedures designed to prevent criminals from disguising illegally obtained funds as legitimate income.

• Know Your Customer (KYC): Processes by which financial institutions verify the identity of their customers to prevent fraud and money laundering. In the aftermath of the Zhao and Binance scandal, "decentralized KYC" surged in popularity. These firms aim to meet regulator KYC requirements while offering a decentralized experience and user protections that crypto users seek.

• Pardon: Executive clemency that forgives a federal crime and restores civil rights, effectively erasing the conviction.

• Initial Coin Offering (ICO): A fundraising method in which new cryptocurrency projects sell tokens to early backers.

See also

• Sam Bankman-Fried
• Prison Consultants

Frequently Asked Questions

Q: Why did Changpeng Zhao plead guilty?

Changpeng Zhao pleaded guilty to violating the Bank Secrecy Act by failing to implement an adequate anti-money laundering program at Binance, the world's largest cryptocurrency exchange. This allowed the platform to process transactions for criminal enterprises including terrorist organizations (Hamas, al-Qaeda affiliates), ransomware operators, and individuals subject to U.S. sanctions in Iran, Cuba, and Russia.

Q: How long was Changpeng Zhao's sentence?

Zhao was sentenced to 4 months in federal prison on April 30, 2024, significantly below the 3 years prosecutors requested. He also paid a $50 million personal fine, while Binance paid $4.3 billion in corporate penalties. He completed his sentence in September 2024 and was later pardoned by President Trump on October 23, 2025.

Q: How much was Binance's fine?

Binance agreed to pay approximately $4.3 billion in penalties to various federal agencies as part of the settlement, one of the largest corporate penalties in American history. Zhao personally paid an additional $50 million fine. The penalties went to the Department of Justice, CFTC, FinCEN, and other regulators.

Q: Did Changpeng Zhao step down from Binance?

Yes, as part of his November 2023 plea agreement, Zhao agreed to step down as CEO of Binance. Richard Teng replaced him as CEO of the cryptocurrency exchange. Zhao was also required to remain in the United States pending sentencing, despite previously living in Dubai.

Q: Where did Changpeng Zhao serve his sentence?

Zhao served his 4-month sentence at FCI Lompoc II, a low-security federal prison in Santa Barbara County, California. He was assigned inmate number 88087-510 and entered prison as the wealthiest federal inmate in American history, with a net worth estimated at approximately $33 billion.

Q: Was Changpeng Zhao pardoned?

Yes, President Donald Trump issued a full pardon to Changpeng Zhao on October 23, 2025, approximately one year after his release from prison. The pardon erased his federal conviction entirely. Senator Elizabeth Warren criticized the pardon as "corruption," while supporters argued that the four-month sentence and $4.3 billion in corporate penalties represented sufficient accountability.