On April 30, 2024, in Seattle, United States, the gavel fell in the sentencing case of Zhao Changpeng (CZ), the founder and former CEO of Binance. Judge Richard Jones sentenced CZ to four months of imprisonment, overturning the previous proposal of the Department of Justice for a maximum of 36 months.
CZ’s trial is the second high-profile case this year in which regulatory agencies in the United States crackdown on criminal activities in the crypto industry. In March, Sam Bankman-Fried, the founder of FTX, and a former business competitor of CZ, was sentenced to 25 years in prison for fraud.
CZ, with a crew cut and dressed in a dark blue suit, appeared in court accompanied by his mother, sister, nephew, and son. During the sentencing, Judge Jones expressed his belief that CZ would not commit crimes again, stating, “You are a family-oriented man and a dedicated person.” CZ nodded vigorously and touched his chest during Judge Jones’ speech.
However, some crypto critics are not convinced by the outcome of the trial. John Reed Stark, a former SEC official and a critic of the crypto industry, stated that a brief prison term is “a small price to pay for becoming a lifelong billionaire” and that the industry doesn’t care about the extraordinary wave of crypto crime caused by individuals like CZ. Dennis Kelleher, the President and CEO of Better Markets Inc., an advocacy organization, commented that the Department of Justice should prosecute dozens of individuals associated with Binance and not only prosecute and punish them but also permanently ban them from the financial industry. He believes CZ should face the harshest sanctions.
Judge: No evidence that Zhao was “informed” of Binance’s specific illegal activities
Judge Jones stated that there is no evidence to suggest that Zhao was “informed” of Binance’s specific illegal activities, refuting the DOJ prosecutor’s request to increase the sentence from 18 months to three years.
While the judge believes that CZ is unlikely to commit crimes again, he wants Zhao to understand that despite having “wealth, power, and status,” no one is immune from prosecution or above US law.
CZ apologized in court and expressed a willingness to take responsibility for his “mistakes.” He also mentioned that Binance has implemented Know Your Customer (KYC) and anti-money laundering programs and is cooperating with the government.
As part of the plea agreement reached in November, CZ has already paid a $50 million fine and stepped down as the CEO of Binance. Binance has also admitted to violating anti-money laundering and sanctions laws, agreed to pay a $4.3 billion fine, and appointed an independent monitor to oversee the company’s compliance.
“CZ will become the wealthiest prisoner in US history”
The $50 million fine previously paid by CZ only represents a small portion of his personal net worth. According to Bloomberg, CZ’s wealth has surged by $25 billion with the recovery of the crypto market last year. The Bloomberg Billionaires Index currently ranks him 38th among global billionaires.
According to data from CCData, Binance currently holds a dominant position of 41.6% in the cryptocurrency trading market. Since CZ stepped down as CEO in November 2023, this percentage has decreased by 1.42%. However, Binance still maintains a leading position in the spot and derivatives markets.
The company stated that it has gained over 40 million new users in 2023, a 30% increase from the previous year, and the total value of user assets held by Binance has exceeded $100 billion. Bloomberg estimates that the company’s annual revenue for the 12 months ending in March could reach $9.8 billion.
With the accelerated growth of Binance’s business in the latest crypto bull market, CZ’s wealth could increase further, making him the wealthiest prisoner in US history.
According to court records, CZ is likely to serve his sentence in a detention center near Seattle-Tacoma International Airport. Although the security level of the detention center is lower, Sam Mangel, a US prison advisor, told Bloomberg that CZ might encounter some friendly faces among his fellow inmates.
Mangel stated, “He won’t be extorted or threatened. People who are very successful in low-security prisons are often respected.”
Taking off the “Wild West” hat
After the market crash in 2022 exposed fraud and misconduct in the entire industry, the crypto industry became a target for US authorities.
As a leading exchange, Binance continues to make efforts to address the notorious “Wild West” crypto culture.
Earlier this year, He Yi, the co-founder of Binance, condemned so-called “wash trading” on social media, referring to manipulative buying and selling behaviors in the market for corrupt motives. The company announced the launch of a bounty mechanism and vowed to blacklist any employees involved in improper trading. He Yi stated, “If we confirm that members of the Binance team engage in corrupt behavior, we will keep your identity confidential and reward you with a security vulnerability bonus ranging from $10,000 to $5 million.”
Austin Campbell, a part-time professor at Columbia Business School and a blockchain company advisor, commented, “Binance is the largest exchange and has operated well despite the failures of FTX, 3AC, Terraform Labs, and others. The US government’s actions are seen as a big pending issue, and their ability to survive gives people confidence in them.”
However, the legal troubles are not over. In June last year, the US Securities and Exchange Commission (SEC) filed a lawsuit against Binance and its sister company Binance.US, accusing them of operating unregistered exchanges, acting as unregistered brokers, and operating as an unregistered clearing agency, among other allegations. Many believe that this case will continue for years as Binance fights against the accusations.
Additionally, Roger Ver, an early Bitcoin investor known as “Bitcoin Jesus,” is currently facing charges from the Department of Justice for email fraud, tax evasion, and filing false tax returns, with nearly $50 million in tax evasion. Roger Ver has been arrested in Spain, and the US Department of Justice is seeking his extradition to the US for trial.
Author: BitpushNews Mary Liu