STORY: The former chief executive of the world's largest cryptocurrency exchange, Binance, was sentenced on Tuesday to four months in prison, after pleading guilty to violating U.S. anti-money laundering laws.

Changpeng Zhao, known as "CZ", was once considered the most powerful figure in the industry.

He's now the second major crypto boss to be sent to prison after FTX's Sam Bankman-Fried, who is appealing his own 25-year prison term.

In a Seattle courtroom, Zhao told the federal judge before his sentencing that he was "sorry".

And that: "I failed to implement an adequate anti-money laundering program... I realize now the seriousness of that mistake."

Prosecutors had argued Zhao's conduct was not a "mistake".

They accused Binance of employing 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.

They also said it supported the sale of child sexual abuse materials and received a large portion of ransomware proceeds.

The judge faulted the 47-year-old for making Binance's profitability a higher priority than complying with U.S. laws.

But he shot down prosecutors' request for three years behind bars.

The judge said they did not show that Zhao knew in advance about illegal activity, and instead handed down the far shorter four-month term.

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

United States Attorney Tessa Gorman told reporters it was an "epic day", saying:

"Incarceration was critical in this case and we're pleased with the result."

Binance has also agreed to a $4.32-billion penalty.

While Zhao is paying a $50-million criminal fine, plus $50 million to the U.S. Commodity Futures Trading Commission.

Zhao stepped down as head of Binance last November, when he and the exchange he founded in 2017 admitted to evading money-laundering requirements under the Bank Secrecy Act.

Much of Binance's misconduct, including its weak money laundering controls, was first reported by Reuters.