Binance co-founder Changpeng Zhao, known in the crypto world as "CZ," is scheduled to be released on Friday evening, following a 4-month stint in prison after pleading guilty to failing to "maintain an effective anti-money laundering program,"
Although his prison term was officially slated to end on Sunday, according to prison rules, inmates whose official release date is set for a weekend or holiday can be discharged on the last preceding weekday—unless circumstances warrant further detention.
Despite when he's actually released, Zhao faces strict limitations on his involvement with Binance, the world’s largest cryptocurrency exchange by trading volume, which he founded in 2017.
Zhao’s legal troubles began in 2021, as global regulators increasingly scrutinized the exchange's operations.
Authorities accused the company of operating without proper licensing, running an unlicensed securities exchange, failing to comply with Anti-Money Laundering (AML) standards, and facilitating illegal trading practices. Binance’s expansive operations and decentralized nature led to warnings from financial regulators in several countries, including the U.K.’s Financial Conduct Authority and Japan's Financial Services Agency.
In March 2023, the U.S. Commodity Futures Trading Commission (CFTC) filed a lawsuit against Binance, accusing the company of allowing U.S. residents to trade crypto derivatives without proper registration, violating U.S. federal law. The CFTC also alleged that the exchange, under Zhao’s leadership, had inadequate Know Your Customer (KYC) and AML protocols, potentially facilitating illicit activities.
The Department of Justice (DOJ) later filed its own charges related to operating an unregistered exchange and market manipulation. Zhao was eventually convicted in 2024, resulting in fines amounting to hundreds of millions of dollars and imposing strict conditions on his future involvement in Binance and the crypto sector.
Before Binance, Zhao had made a mark in the crypto space before founding Binance.
With a background in technology, he worked at blockchain.info as Head of Development and served as CTO at OKCoin. In 2017, he co-founded Binance, which quickly became a dominant player in the crypto market, attracting millions of users globally.
However, Binance’s rapid growth and Zhao's assertive approach to expansion often skirted regulatory boundaries.
Binance operated in various jurisdictions without appropriate licenses, drawing regulatory scrutiny and criticism. Despite multiple warnings from global regulators, Zhao maintained that decentralized finance (DeFi) should operate independently of traditional financial rules. This defiance, however, led to his legal troubles, resulting in his conviction and his removal from Binance's daily operations.
Following his release, Zhao faces strict limitations on his activities within Binance and the crypto industry at large. As part of his settlement, he is barred from holding any executive or strategic role within Binance and cannot participate in the company's day-to-day operations, including trading, marketing, or regulatory dealings. Additionally, Zhao is restricted from engaging in activities directly related to crypto exchanges or trading services for a specified period.
"We are delighted that CZ will be home with his family. While he is no longer managing or operating Binance, we are excited to see what he does next," a Binance spokesperson said in a note sent to Decrypt. "Since last year, Binance has continued to thrive under the leadership of our current team, surpassing 230 million users globally, and we are proud to continue leading the industry responsibly."
Edited by Stacy Elliott.