Author: jk, Odaily Planet Daily
On April 30th, local time in the United States, at the Federal Court in Seattle, United States, the founder and former CEO of Binance, CZ, was officially sentenced to 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 the operation of its platform.
In the cryptocurrency industry, this case not only reflects the strict attitude of the US Department of Justice towards cryptocurrency exchanges' compliance with the law, but may also have a profound impact on the global cryptocurrency market.
For Binance itself, the smooth transition to "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 agreed to pay over $4 billion in fines. CZ also agreed to resign as CEO and pay a $50 million fine. This marked the formal end of the years-long investigation into Binance.
In this case, Binance was charged with money laundering violations, operating unlicensed money transmission business, and violating US sanctions. Binance admitted that its platform failed to prevent and report suspicious transactions related to 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), and Binance is required 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 from the platform and was replaced by Richard Teng. 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 today's sentencing hearing, the US Department of Justice (DOJ) and his defense lawyers debated the length of CZ's sentence for his guilty plea to violating the Bank Secrecy Act in November last year. According to a 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 sentence of home confinement and probation, rather than imprisonment. According to documents 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 Department of Justice is seeking a sentence of around 3 years to serve as a deterrent. "The government wants to make sure that these lower guidelines don't make anyone feel free to violate our anti-money laundering measures," she said. "Usually in our plea negotiations, we negotiate matters such as the amount of loss and arguments that both sides may retain." "In this document, I didn't see anything that indicated they were limited to 18 months."
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 noted 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 understand 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 depicted a person 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 showed that CZ is committed to his family and cited examples of Binance's charitable work.
Revealing the Multi-faceted CZ
In the defense, CZ's lawyer cited his "unwavering" acceptance of responsibility, his payment of a $50 million criminal fine, and the absence of any similar cases where the defendant was imprisoned, in an effort to shorten CZ's sentence as much as possible. The lawyer also mentioned that under CZ's leadership, Binance has become an industry leader in compliance, "despite 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 were not, and necessary compliance controls were not established, for which he had no excuse. CZ expressed regret for not being able to change this part of Binance's story. 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: a letter written by his sister, former Morgan Stanley executive director Jessica Zhao, described how Binance handled a large number of customer withdrawals after the 2022 FTX incident. 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 Turkish earthquake disaster, 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 forces to ensure necessary support for Ukrainian team members. At the same time, through Binance Charity's cooperation with multiple international organizations, large-scale humanitarian aid was provided to refugees, directly providing economic support to 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, understanding the complexity and core values of this important figure in the cryptocurrency field.
Binance Moves Forward with Confidence
Despite CZ's departure from the CEO position at Binance, its market position has not been significantly affected and it continues to be 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 over 101 million, maintaining a leading position globally. Especially since November last year, there has been no downward trend in trading volume due to the legal events, and no panic outflows have occurred. Instead, in March this year, driven by the bull market cycle, the trading volume soared to $68 billion, setting a new historical record.
As stated in a public announcement by Binance in 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 charge Binance with misappropriating any user funds, and did not charge Binance with 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 an important reference for the long-term development of the entire cryptocurrency market. Through 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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