Edited: Wu Shuo Blockchain

Main Sources:

https://twitter.com/nikhileshde/status/1785353891871383864

https://www.theverge.com/2024/4/30/24144807/binance-founders-sentencing-hearing-liveblog

CZ was ultimately sentenced to four months in prison, far below the 36 months requested by the Department of Justice.

Full hearing:

CZ arrived at the court early and is seated with his legal team. He is wearing a dark blue suit with a light blue tie and appears very nervous. However, due to the judge's personal matters, the hearing was postponed to 9:30 AM PT / 12:30 PM ET.

The first major information: Judge Jones stated disagreement with the Department of Justice's request to extend the sentence. Judge Richard Jones stated that he disagreed with the Department of Justice's request to enhance the sentencing guidelines, extending the sentence from 18 months to 3 years, as there was no evidence that the defendant (CZ) had been informed of illegal activities.

The Department of Justice lawyer argued that the judge should be able to infer that CZ knew about the illegal activities and cited a previous case where the judge inferred that the defendant knew about illegal activities.

Judge Jones indicated basic agreement with the probation office's viewpoint. The total level is 12, which would result in 10-16 months of imprisonment and 1-3 years of supervised release. Before the final ruling, the opinions of the Department of Justice, the defense, and CZ will now be heard.

The judge explicitly rejected the Department of Justice's request to extend the sentence. The Department of Justice lawyer stated that CZ intentionally attempted to access the U.S. financial system. He said, "Violating the law is at the core of his efforts, we are not speculating here, Mr. Zhao himself has said this—seeking forgiveness, not permission."

The DOJ lawyer stated, "We are not suggesting that Mr. Zhao is Sam Bankman-Fried or some kind of monster," and added that their recommendation is not directed at CZ as an individual.

The DOJ lawyer said, "Mr. Zhao and Binance did indeed encourage compliance improvements, but this was after Binance was discovered… This is what they should have done… While commendable, it is not sufficient reason for probation here." "The probation judgment here will encourage others to break the law and do so on the largest scale possible."

Judge: Your suggestion is twice the penalty guidelines; would this result in an unfair judgment? DOJ: No defendant bears such a significant responsibility; "we believe this would not result in an unfair judgment… The unfairness lies in the severity of the conduct."

The judge continued to express strong skepticism towards the DOJ's request for a longer sentence, asking for specific legal basis and other issues. The DOJ lawyer continued to emphasize that the judgment must reflect the seriousness of the crime.

CZ is not satisfied with this. He has been listening to the Department of Justice's statements, frowning and furrowing his brow from time to time.

The probation department spoke, recommending a prison sentence of 5 months, which they believe would be sufficient to deter the defendant and others, "without being overly harsh." This would be one of the longest sentences in the country for this type of behavior.

The defense spoke, "When I hear the government discussing the crime here, they seem not to be discussing the actual crime," which is CZ admitting to not having an anti-money laundering program. Sanction violations are irrelevant.

Now another defense lawyer is speaking, stating that CZ's mother, son, nephew, and sister are all present. He pointed out letters supporting CZ, mentioning CZ coming to the U.S. He compared it to another case where a defendant spent 4.5 years protesting extradition: "[CZ] did not do that. He chose to come here."

The judge is now questioning the defense lawyer, including verifying whether CZ would continue to benefit from owning Binance.

The defense stated that he has no control.

The defense stated that all factors support a reduced sentence.

Judge: The probation department still recommends 5 months, do you agree?

Defense: I agree, but I think the probation department mentioned 5 months and then listed 6 factors you might consider to reduce this period. The defense lawyer suggested that CZ be sentenced to probation rather than imprisonment—this judgment is very similar to that of BitMEX co-founder Arthur Hayes, who admitted to the same crime in 2022 and was sentenced to six months of home detention and two years of probation.

There was a relatively long back-and-forth discussion about precedents and Binance's own history; the judge asked the defense if they were implying that Binance implemented KYC/AML without law enforcement intervention; the defense stated that this was at least "long before the solution."

The defense once again pointed out that CZ voluntarily came to the U.S. instead of staying in the UAE (DOJ previously stated that this was commendable, but another possibility is that CZ became a fugitive).

CZ spoke. He first said, "I'm sorry," and stated that he wants to take responsibility for his "mistakes." He pointed out that Binance has implemented KYC/AML procedures and is cooperating with the U.S. government. "In my view, before I stepped down as CEO, I did everything possible."

"Everything I see about your history and characteristics has mitigating and positive qualities," the judge said. The court acknowledges that he voluntarily came to the U.S., had not violated the law before, and took "unconventional and significant steps" in cooperating with law enforcement. But the nature of the incident is "irritating."

The judge stated that he read every letter submitted (161 letters) because "understanding who you are is important." These letters depict a person driven by your drive, passion, and determination, the judge said: you risked all your net worth to make Binance successful. It is also clear from the letters that you are a dedicated family man.

The judge stated that CZ has the personnel, resources, and "funds" to comply with U.S. regulations, but he "failed on this occasion." The judge said, "After this painful lesson, you have the ability and willingness to reform." I think we are now entering the actual sentencing phase.

The judge once again rejected the Department of Justice's 36-month request, "the court needs to make an effort to make an appropriate and reasonable judgment," the judge said. The judge ultimately sentenced four months in prison.

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