Changpeng Zhao, the former chief executive of Binance, was sentenced on Tuesday to four months in prison after pleading guilty to violating US laws against money laundering at the world's largest cryptocurrency exchange.

Once considered the most powerful crypto industry figure, Zhao, known as "CZ," is the second major crypto boss to be sentenced to prison.

The sentence imposed by US District Judge Richard Jones in Seattle was significantly shorter than the three years sought by prosecutors, and below the maximum one and a half years recommended under federal guidelines.

It was also much lighter than the 25 years behind bars that Sam Bankman-Fried received in March for stealing US$8 billion from customers of his now-bankrupt FTX exchange. Bankman-Fried is appealing his conviction and sentence.

Still, prosecutors cheered the outcome of what had been a years-long investigation into Binance and Zhao, a billionaire who had been living beyond US reach in the United Arab Emirates.

"This was an epic day,” US Attorney Tessa Gorman told reporters outside the courthouse. “Incarceration was critical in this case and we’re pleased with the result.”

Before handing down the sentence, Jones faulted Zhao for making Binance's growth and profitability a higher priority than complying with US laws.

"You had the wherewithal, the finance capabilities, and the people power to make sure that every single regulation had to be complied with, and so you failed at that opportunity," he said.

Zhao, 47, did not visibly react upon hearing his sentence.

"'Crime pays' is the message sent today," Dennis Kelleher, head of the financial reform advocacy group Better Markets, wrote in an email, noting Zhao will still get to keep his vast wealth.

Prosecutors said Binance employed a "Wild West" model that welcomed criminals, and did not report more than 100,000 suspicious transactions with designated terrorist groups including Hamas, al-Qaeda and Islamic State.

"I'm sorry," Zhao told the judge before being sentenced. (Reuters)