Changpeng Zhao, the founder of cryptocurrency firm Binance, has been sentenced to four months in a US prison after pleading guilty to money laundering charges. This marks one of the most significant developments in the crypto industry since the imprisonment of Sam Bankman-Fried.

Investigations by two Treasury agencies revealed that Binance failed to prevent transactions associated with groups like the Islamic State group, al-Qaeda, or the armed wing of Hamas. Zhao’s guilty plea included violations of US anti-money laundering laws, leading to a settlement of $4.3 billion by Binance to resolve the charges.

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Prosecutors had sought a three-year prison term for Zhao, emphasising the seriousness of the crime and its impact on financial integrity. They argued that Zhao’s decision to violate US law was driven by a desire to attract users, expand the company, and enrich himself.

Zhao’s attorneys countered that probation would be a just and appropriate punishment, citing his acceptance of responsibility and philanthropic track record. Zhao himself acknowledged his mistakes and expressed a willingness to take responsibility for them.

Impact on Binance and Crypto Industry

Binance, once a dominant force in the crypto-trading market, faced significant challenges following Zhao’s resignation and the legal proceedings. The company shifted its operations internationally after regulatory crackdowns but faced difficulties amid market volatility and regulatory scrutiny.

Despite the setbacks, the crypto industry has shown signs of recovery, especially with US regulators approving exchange-traded funds (ETFs) in Bitcoin. Binance’s new CEO, Richard Teng, emphasised the company’s commitment to compliance and close collaboration with regulators, investing significant resources in regulatory adherence.

Binance’s Battles in Africa

Binance faces legal battles in several African countries, including Nigeria and Kenya. In Nigeria, Binance has been accused of manipulating the naira value through its P2P feature, leading to a significant clampdown on the platform and its operations. The Nigerian government filed tax evasion charges against Binance for contravening four tax laws, including non-payment of company income tax, non-payment of value-added tax (VAT), noncompliance with tax return filing obligations, and collaboration in assisting its users in evading taxes through the platform.

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In Kenya, Binance has also faced regulatory challenges. The Central Bank of Kenya (CBK) issued a warning in 2021, stating that Binance and other cryptocurrency exchanges were not licensed to operate in the country. This warning came after the CBK stated in 2020, stating that cryptocurrencies were not legal tender in Kenya and that the public should be cautious when dealing with them.

Despite these challenges, Binance continues to operate in Africa, with a regional manager for Africa based in Nairobi, Kenya. The company has also committed to working with local authorities, lawmakers, and regulators to comply with local laws and regulations.