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 in connection with his role as founder and CEO of Binance, the world's largest cryptocurrency exchange, before receiving 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, allowing the exchange to process transactions for criminal enterprises including terrorist organizations, ransomware operators, and sanctions evaders. As part of his plea agreement, Zhao agreed to step down as Binance's CEO and personally pay a $50 million fine, while Binance itself agreed to pay $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 dominant force in global cryptocurrency trading, processing more transaction volume than all other crypto exchanges combined at its peak. His rapid ascent made him one of the wealthiest people in the world, with a net worth estimated at over $60 billion in early 2022 before cryptocurrency market declines reduced that figure. Zhao cultivated a reputation as a visionary entrepreneur who was democratizing finance through blockchain technology, and Binance's "CZ" became one of the most recognizable figures in the crypto industry.

However, Binance's explosive growth came at the cost of regulatory compliance. Federal prosecutors established that Zhao had prioritized expansion over implementing the anti-money laundering (AML) and know-your-customer (KYC) programs required by U.S. law. This failure allowed Binance to become a conduit for illicit finance on a massive scale. Terrorists, sanctions evaders, ransomware operators, and other criminals used the platform to move funds with minimal scrutiny. While Zhao was not charged with directly facilitating these crimes, his willful failure to implement required safeguards made them possible.

Zhao's four-month sentence, while far below the three years prosecutors had requested, nonetheless represented a significant moment: one of the world's richest individuals going to federal prison. Zhao 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."

Background

Early Life and Education

Changpeng Zhao was born on September 10, 1977, in Jiangsu Province, China. When he was 12 years old, his family emigrated to Canada, settling in Vancouver. Zhao has described his early years in Canada as financially difficult, working various jobs including at McDonald's to help support his family.

Zhao attended McGill University in Montreal, where he studied computer science. After graduation, he worked in the financial technology sector, including positions at the Tokyo Stock Exchange and Bloomberg developing trading software. These experiences gave him expertise in both finance and technology that would prove crucial to his later entrepreneurial ventures.

Entry into Cryptocurrency

Zhao became interested in cryptocurrency around 2013, reportedly after a poker game where a fellow player described Bitcoin. He sold his apartment in Shanghai to buy Bitcoin and joined Blockchain.info (now Blockchain.com) as head of development. He later 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 with extraordinary speed, becoming the world's largest cryptocurrency exchange by trading volume within six months. Binance's success stemmed from several factors: low trading fees, a wide selection of cryptocurrencies, high liquidity, and aggressive global expansion.

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

By 2022, Binance processed more cryptocurrency trading volume than all other exchanges combined, and 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.

Indictment, Prosecution, and Sentencing

Federal Investigation

U.S. federal authorities, including the Department of Justice, the Commodity Futures Trading Commission (CFTC), and the Treasury Department's Financial Crimes Enforcement Network (FinCEN), conducted a multi-year investigation into Binance's operations. 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.

More troubling, investigators discovered that 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 revealed that Binance employees, including senior compliance staff, were aware of these problems but that 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:

• Step down as CEO of Binance
• Pay a personal fine of $50 million
• Remain in the United States pending sentencing (Zhao had been living in Dubai)

Separately, Binance agreed to plead guilty to charges including money laundering, unlicensed money transmission, and sanctions violations, and to pay 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. Zhao's defense team requested probation, arguing that their client had no prior criminal history and had cooperated with authorities.

Judge Jones sentenced Zhao to four months in federal prison—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 the prison term, 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, located in Santa Barbara County on California's central coast, is a low-security federal prison that houses male inmates. Zhao was assigned inmate number 88087-510.

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

Zhao completed his sentence and was released from federal custody in late September 2024. Following his release, he was subject to a period of supervised release with conditions including restrictions on his involvement in certain financial activities.

Presidential Pardon

On October 23, 2025, President Donald Trump issued a full pardon to Changpeng Zhao, erasing his federal conviction entirely. The pardon came approximately one year after Zhao's release from prison and represented a complete vindication from a legal standpoint, restoring rights that had been affected by his felony conviction.

The pardon was announced as part of a broader set of clemency actions by President Trump, though the specific reasoning behind Zhao's pardon was not 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," stating: "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.

Supporters of the pardon argued that Zhao's four-month sentence and the $4.3 billion in corporate penalties paid by Binance represented sufficient accountability, and that the pardon appropriately recognized Zhao's cooperation with authorities and lack of prior criminal history.

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 has made public appearances at industry events and maintained a significant social media presence, particularly on Twitter/X, where he has millions of followers.

Zhao has invested in various cryptocurrency and blockchain projects and has been involved in educational initiatives related to blockchain technology. His pardon removed legal barriers that might have limited his activities in the financial sector, allowing him greater freedom to pursue business opportunities.

Public Statements and Positions

At his guilty plea and sentencing, Zhao accepted responsibility for his conduct and expressed remorse. "I failed to build the proper compliance system at Binance," he acknowledged, while noting that he had not 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, neither extensively relitigating his prosecution nor dwelling on his prison experience. He has emphasized his focus on the future and on the continued development of blockchain technology.

On the broader cryptocurrency industry, Zhao has maintained his long-held position that blockchain technology and cryptocurrencies represent a transformative force in finance, while acknowledging that the industry must work within regulatory frameworks to achieve mainstream acceptance.

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, firms which 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.