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Vinapse founder Changpeng Zhao to spend 4 months in jail - over 'inadequate protection' against crypto exchange money laundering

Vinapse founder Changpeng Zhao to spend 4 months in jail - over 'inadequate protection' against crypto exchange money laundering
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Zhao pleaded guilty in November, and on April 30, he received a sentence of 4 months in prison.

"You had the financial means and authority to ensure compliance with each individual regulatory act, but you did not take advantage of this opportunity," said US District Judge Richard Jones Zhao according to a Reuters report.

Federal prosecutors sought 3 years in prison for Zhao, while the defense insisted on 5 months on probation.

"I am very sorry," Zhao said. "I believe that the first step to taking responsibility is to fully acknowledge mistakes. I failed to implement an adequate anti-money laundering program... I now realize the seriousness of this mistake."

In November, Zhao, better known as CZ, reached an agreement with the US government to conclude a years-long investigation into Binance - the world's largest cryptocurrency exchange. As part of the deal, Chanpen also stepped down as CEO (according to CNBC, he still owns about 90% of Binance shares).

Zhao is accused of "deliberately" failing to implement an effective anti-money laundering program as required by the Bank Secrecy Act, as well as allowing Binance to process transactions related to illegal activity proceeds (including between Americans and individuals subject to sanctions). The US has ordered Binance to pay a $4.3 billion fine and confiscation.

The US Securities and Exchange Commission and the Commodity Futures Trading Commission separately sued Binance for mishandling client assets and operating an illegal unregistered exchange in the US.

A representative of Binance said in a statement to CNBC that the crypto exchange has made "significant compliance improvements", particularly in identifying and combating money laundering and "hiring key compliance personnel".

Previously, the founder of the FTX cryptocurrency exchange, Sam Bankman-Fried, was sentenced to up to 25 years in prison for fraud and misappropriation of client funds.

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