Original | Odaily Planet Daily

Author | jk

On April 30th, local time in the United States, in the Federal Court of Seattle, Binance's founder and former CEO CZ officially received a sentence of 4 months in prison for violating anti-money laundering laws. The former leader of the world's largest cryptocurrency exchange admitted to violating the Bank Secrecy Act in its operations on the platform.

In the cryptocurrency industry, this case not only reflects the strict attitude of the US Department of Justice towards cryptocurrency exchanges, but may also have a profound impact on the global cryptocurrency market.

For Binance itself, the smooth transition of "de-CZ-ification" has not diminished its market position and business data, once again confirming Binance's emphasis on user fund security and brand stability.

Background

Odaily Planet Daily previously reported that Binance and its CEO Zhao Changpeng (CZ) reached a settlement with multiple US regulatory agencies on November 21, 2023, admitting to criminal charges of money laundering and violating US sanctions, and agreeing to pay over $4 billion in fines. CZ also agreed to resign as CEO and pay a $50 million fine.** This marks the formal end of the years-long investigation into Binance.**

In this case, Binance was charged with money laundering violations, operating unlicensed money transmission businesses, and violating US sanctions. Binance admitted that its platform failed to prevent and report suspicious transactions with terrorist organizations, involving at least 1.1 million transactions totaling over $898 million.

Of the fines, $3.4 billion will be paid to the Financial Crimes Enforcement Network (FinCEN) of the US Department of the Treasury, and $968 million will be paid to the Office of Foreign Assets Control (OFAC), requiring Binance to comply with a series of strict sanctions compliance obligations. The US Department of the Treasury stated that this is the largest fine in FinCEN's history.

CZ announced his resignation on X platform and was replaced by Richard Teng as the new CEO. CZ stated that he will take a break and may engage in passive investments, focusing on startups in the blockchain/Web3/DeFi, artificial intelligence, and biotechnology fields.

Subsequently, CZ posted a $175 million personal bail, but was not allowed to return to the UAE. The US requested that CZ hand over all passports (whether valid or expired) to a third-party custodian and report on all compliance.

Sentencing Hearing

At the sentencing hearing held today, the US Department of Justice (DOJ) and his defense lawyers debated the length of CZ's sentence for his November guilty plea to violating the Bank Secrecy Act. According to a guilty plea agreement released last November, CZ has the right to appeal any sentence exceeding 18 months, but the DOJ requested a 36-month sentence in a sentencing memorandum released last week. The defense requested a change to house arrest and probation, rather than serving time in prison. According to a filing submitted by the defense last week, the probation office recommended a five-month sentence in its pre-sentencing report.

According to Coindesk, legal professionals believe that the DOJ is trying to send a deterrent message with a sentence of around 3 years. "The government wants to make sure that these lower guidelines don't make anyone feel like they can freely violate our anti-money laundering measures," she said. "Usually in our plea negotiations, we negotiate things like loss amounts and arguments that both sides may retain." "In this filing, I didn't see anything indicating that they were limited to 18 months or less."

Prosecutors also stated that this level of sentencing conveys a message that industry leaders "make the right choices every time, that is, to comply with the law."

The judge stated that there is no precedent for the defendant to be imprisoned in such cases. Ultimately, the judge rejected the DOJ's request for a 36-month sentence and instead sentenced CZ to 4 months in prison.

At the same time, the judge mentioned that he had read all 161 letters submitted because "it's important to know who you are." He also mentioned, "I have never seen so many letters, not only from family members, but also from people who have known you for a long time." The judge pointed out that these letters depict a figure driven by drive, passion, and determination. The judge said, "You risked all your net worth just to make Binance successful." He also mentioned that the letters clearly show that CZ is committed to his family and cited examples of Binance's charitable work.

How did CZ react in this case?

In the defense, CZ's lawyer cited his "firm" acceptance of responsibility, the $50 million criminal fine he paid, and the absence of any similar cases where the defendant was imprisoned, to argue for the shortest possible sentence for CZ. The lawyer also mentioned that it was under CZ's leadership that Binance became an industry leader in compliance, "despite the initial failures that led to this prosecution."

In a letter publicly released last week, CZ also apologized for his "bad decisions" and took "full responsibility" for his actions. In the letter, he admitted that compliance reforms should have been implemented at Binance from the beginning, but failed to do so and did not establish necessary compliance controls, for which he has no excuse. CZ expressed regret for this part of Binance's story that he could not change. However, under his leadership, Binance has implemented the strictest anti-money laundering controls since 2022, becoming a leader among non-US exchanges. "I have no excuse for not establishing the necessary compliance controls at Binance," CZ assured that this would be his only "encounter with the criminal justice system."

In addition, in a 350-page plea letter from relevant individuals, we can also see another side of CZ's career: one letter written by his sister, former Morgan Stanley executive director Jessica Zhao, describes how Binance handled a large number of customer withdrawals after the FTX incident in 2022. Jessica emphasized that despite technical pressures, CZ remained calm, ensuring the safety of all customer funds, demonstrating his leadership and commitment to customers.

After the earthquake disaster in Turkey, CZ not only personally donated nearly $5 million, but also launched the Binance Charity Fund, using Web3 technology to support relief efforts, expanding the scope of assistance. This not only supported thousands of disaster victims, but also innovatively expanded the fundraising and distribution of relief funds by opening cryptocurrency accounts for non-governmental organizations.

During the Russia-Ukraine war, CZ's attitude towards the team also demonstrated his people-oriented leadership style and high regard for employee safety. He personally organized task groups to ensure necessary support for team members in Ukraine. At the same time, through Binance Charity's cooperation with multiple international organizations, large-scale humanitarian aid was provided to Ukraine, directly providing economic support to tens of thousands of refugees and displaced persons through cryptocurrency.

These letters collectively depict a figure who demonstrates a high sense of responsibility and integrity in both business and personal ethics. CZ has not only demonstrated outstanding abilities in technology and financial management, but also deep self-reflection and pursuit of integrity in his personal behavior and decision-making. These descriptions provide the audience with a comprehensive and nuanced perspective to understand the complexity and core values of this important figure in the cryptocurrency field.

Binance's Future, Not Lost

Despite CZ's departure from the CEO position at Binance, the exchange's market position has not been significantly affected and still remains the world's largest cryptocurrency exchange. According to Coingecko's data, Binance's 24-hour trading volume remains above $16 billion, with a monthly visit volume of up to 101 million, maintaining a leading position globally. Especially since November last year, there has been no downward trend in trading volume due to legal events, and no panic outflows have occurred. Instead, in March this year, driven by the bull market cycle, trading volume soared to $68 billion, setting a new record.

As stated in a Binance announcement from November last year, "We have always adhered to the core values of user safety and security. We take our custodial responsibilities very seriously and provide 1:1 support for the assets of every user. This means that users can withdraw 100% of their assets from the platform at any time. It is worth noting that in our solution with US institutions, they: did not accuse Binance of misappropriating any user funds, and did not accuse Binance of engaging in any market manipulation."

Binance bravely faces global regulatory challenges, actively engages with regulatory agencies, and is committed to exploring sustainable compliance paths for the cryptocurrency industry. This not only maintains the stability of the platform and user confidence but also provides important reference for the long-term development of the entire cryptocurrency market. With this open and cooperative attitude, Binance demonstrates its maturity and wisdom as an industry leader, further consolidating its leading position in the global cryptocurrency market.

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