Binance founder Zhao’s huge wealth unaffected by prison sentence

Changpeng Zhao, the billionaire co-founder and former CEO of Binance, is expected to see his mammoth wealth remain intact and likely continue to climb even as he faces time behind bars after his sentencing in a Seattle court.

Zhao, who is commonly referred to as “CZ” in crypto circles, was sentenced to four months in prison on Tuesday, after pleading guilty to charges of enabling money laundering at his crypto exchange.

The sentence handed down to Zhao in Seattle federal court was significantly less than the three years that federal prosecutors had been seeking for him. The defense had asked for five months of probation. Sentencing guidelines called for a prison term of 12 to 18 months.

A Binance spokesperson said in a statement to CNBC the crypto exchange has made “considerable compliance enhancements,” including with regards to anti-money laundering detection and “hiring key compliance personnel.”

A lawyer for Zhao did not immediately respond to CNBC’s request for comment.

In November, Zhao struck a deal with the U.S. government to resolve a multiyear investigation into Binance. As part of Binance’s $4.3 billion settlement with the U.S. Department of Justice, Zhao stepped down as the company’s CEO, and the exchange agreed to form a board of directors with independent members, as well as compliance and audit committees.

Of the seven total directors recently named to the since-formed board of directors, three were designated as being “independent” — and five of them, including all of the board’s independent members, submitted letters to the judge in Zhao’s criminal case asking for leniency in sentencing.

Gabriel Abed, the board’s chairman and one of its independent members, told U.S. District Judge Richard Jones that Zhao was “distinguished by a stoic composure and genuine humility” and that “despite his significant achievements,” he maintained a lifestyle marked by simplicity including dressing in clothes bought on Amazon, driving a Toyota and wearing an Apple watch.

Despite Zhao now facing time in prison, industry experts and lawyers who spoke with CNBC say his tremendous personal wealth will remain unaffected and, if anything, is likely to rise.

Los Angeles corporate law attorney Tre Lovell tells CNBC that the government is only entitled to any restitution or fines imposed and not to Zhao’s assets or wealth as a whole. Former federal prosecutor Neama Rahmani agrees, adding that Zhao’s personal wealth won’t be affected by his sentence.

“Because Zhao and the government came to an agreement, the government didn’t get a judgment or restitution order against Zhao and do discovery into his assets,” said Rahmani. “He’ll have significant wealth when he is released from prison.”