Original｜Odaily Planet Daily
Author: jk
On April 30, local time in the United States, Binance founder and former CEO CZ officially accepted the verdict in the U.S. Seattle Federal Court and was sentenced to 4 months in prison for violating anti-money laundering laws. The former leader of the worlds largest cryptocurrency exchange had previously admitted to violating the Bank Secrecy Act in the operation of his platform.
For the encryption industry, this case not only reflects the strict attitude of the U.S. Department of Justice in enforcing the law on cryptocurrency exchanges, but may also have a far-reaching impact on the global cryptocurrency market.
For Binance itself, the de-CZ transition was smooth, and its market position and business data increased instead of decreased, once again confirming the user funds security and brand stability that Binance has repeatedly emphasized.
Recap
Odaily Planet Daily previously reported that Binance and its CEO Zhao Changpeng (CZ) reached a settlement with multiple US regulators on November 21, 2023, admitting criminal charges of anti-money laundering and violating US sanctions, and agreed to pay a fine of more than $4 billion. CZ also agreed to resign as CEO and pay a $50 million fine. This marks the official end of the years-long investigation into Binance.
In the case, Binance was charged with money laundering violations, operating an unlicensed money transmission business, and violating U.S. sanctions. Binance admitted that its platform failed to prevent and report suspicious transactions with terrorist organizations, involving at least 1.1 million transactions totaling more than $898 million.
Of the fine, $3.4 billion will be paid to the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN), while $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 U.S. Treasury Department said 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 said he would take a break and might engage in passive investing, focusing on startups in the fields of blockchain/Web3/DeFi, artificial intelligence, and biotechnology.
CZ has since posted a $175 million personal bail, but has not been allowed to return to the UAE. The United States requires CZ to place all passports (whether valid or expired) in escrow and to report all fulfillment status.
Sentencing Hearing
At a sentencing hearing today, the U.S. Department of Justice (DOJ) and his defense attorneys argued over how long CZ should serve after pleading guilty last November to one count of violating the Bank Secrecy Act. Under a plea agreement released last November, CZ has the right to appeal any sentence longer than 18 months, but the DOJ requested a 36-month sentence in a sentencing memorandum released last week. The defense requested that he serve no prison time by serving a sentence under house arrest and on probation. The probation office recommended a five-month sentence in its pre-sentencing report, according to documents filed by the defense last week.
According to Coindesk, citing professionals, the Department of Justice is trying to use this case as a warning, so it requested a sentence of about 3 years. The government wants to ensure that these lower guidelines do not make anyone feel free to violate our anti-money laundering measures, she said. Usually when we negotiate a guilty plea, we negotiate things like the amount of loss and arguments that both parties may retain. In this document, I dont see anything that indicates they are limited to 18 months.
Prosecutors also said this level of sentencing sends a message that industry leaders need to make the right choice every time and obey the law.
The judge said there was no precedent for the defendant being imprisoned in such a case. Ultimately, the judge rejected the Ministry of Justices request for a 36-month sentence and chose to sentence CZ to four months in prison.
The judge also mentioned that he read all 161 letters submitted because its important to know who you are. He also mentioned: I have never seen so many letters, not just from family, but also from people who have known you for a long time. The judge pointed out that the letters portrayed a person driven by motivation, passion and determination. The judge said: You risked your entire net worth just to make Binance successful. He also mentioned that the letters clearly showed that CZ was a person dedicated to his family and cited the example of Binances philanthropy.
Restore a more realistic and multifaceted CZ
On the defense side, CZ’s lawyers cited his “unwavering” acceptance of responsibility, the $50 million criminal fine he paid, and the fact that no defendant in similar cases has been imprisoned, to try to get CZ a shorter sentence as much as possible. At the same time, the lawyers also mentioned that it was CZ’s leadership that made Binance an industry leader in compliance, “despite the initial failures that led to this prosecution.”
CZ also mentioned in the letter made public last week that he apologized for his poor decision-making 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 he failed to do so and did not establish the necessary compliance controls, which he said he could not refute. CZ expressed regret for not being able to change this part of the Binance story. However, under his leadership, Binance has implemented the most stringent anti-money laundering controls since 2022, becoming a leader among non-US exchanges. I have no excuse for failing to establish the necessary compliance controls at Binance, CZ assured that this would be his only contact with the criminal justice system.
At the same time, in the 350-page petition letter from relevant people, we can also see another side of CZs career : one of the letters was written by his sister, Jessica Zhao, a former executive director of Morgan Stanley, describing Binances handling of a large number of customer withdrawals after the FTX incident in 2022. Jessica emphasized that despite the technical pressure, CZ remained calm and ensured the safety of all customer funds, proving his leadership and commitment to customers.
After the earthquake in Turkey, CZ not only donated nearly $5 million personally, but also launched the Binance Charity Fund to support disaster relief efforts using Web3 technology, expanding the scope of help. This not only supported thousands of victims, but also innovatively expanded the way relief funds are raised and distributed by opening cryptocurrency accounts for non-governmental organizations.
During the Russo-Ukrainian war, CZ’s attitude towards his team also demonstrated his people-oriented leadership style and his high regard for employee safety. He personally organized task forces to ensure that team members in Ukraine received the necessary support. At the same time, through Binance Charity, he worked with multiple international organizations to provide large-scale humanitarian assistance to refugees, providing direct financial support to thousands of refugees and displaced persons through cryptocurrency.
Together, these letters portray a person who demonstrates a high sense of responsibility and integrity in both business and personal ethics. CZ has demonstrated not only outstanding technical and financial management capabilities, but also deep self-reflection and a pursuit of integrity in his personal behavior and decision-making. These descriptions provide viewers with a comprehensive and nuanced perspective to understand the complexity and core values of this important figure in the cryptocurrency field.
Binance is on the road ahead with full confidence
Although CZ has left the CEO position of Binance, Binances market position has not been significantly affected, and it still ranks as the worlds largest cryptocurrency exchange. According to Coingecko data, Binances 24-hour trading volume remains above $16 billion, with monthly visits as high as 101 million, steadily leading the world. Especially since November last year, the trading volume has not shown a downward trend due to legal events, and there has been no panic outflow. On the contrary, in March this year, driven by the bull market cycle, the trading volume once soared to $68 billion, setting a new historical record.
As Binance said in its announcement last November, “We remain committed to our core values of user safety and security. We take our custodian responsibilities very seriously and back every user’s assets 1:1.* This means that users can withdraw 100% of their assets from the platform at any time. It is worth noting that in our settlement with the U.S. agencies, they: did not accuse Binance of misappropriating any user funds, and did not accuse Binance of engaging in any market manipulation. ”
Binance has the courage to face global regulatory challenges, actively engage in dialogue with regulators, and is committed to exploring sustainable compliance paths for the cryptocurrency industry. This not only maintains the stability of the platform and the confidence of users, but also provides an important reference for the long-term development of the entire crypto market. Through this open and cooperative attitude, Binance has demonstrated its maturity and wisdom as an industry leader, further consolidating its leadership in the global crypto market.
