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On April 30th, the sentencing hearing is looming, with US prosecutors recommending a 36-month prison sentence for Binance co-founder Zhao Changpeng (CZ) for violating the Bank Secrecy Act, doubling the previously expected maximum sentence of 18 months. Following this, 161 letters of support for CZ were released online, dominating social media.
With so much support, it's clear that CZ, as a prominent figure in the crypto industry, has accumulated a strong network and reputation over the years. It's worth noting that even prominent figures like SBF only collected around twenty letters of support, most of which came from family and friends.
A total of nearly 350 pages of letters from different relationship layers attempt to portray CZ as a person of good character, responsibility, and humility. In addition to his close friends and family, the list of supporters includes many industry executives, such as Fosun International co-founder Xinjun Liang, two members of the ruling family of the United Arab Emirates, senior executives from the crypto mining company Bitfury, the founder of the venture capital firm Antler, and former US Ambassador to China and current member of the Binance Advisory Committee, Max Baucus.
Simple Living, Humble Lifestyle
According to the Bloomberg Billionaires Index as of April 24, 2024, the 47-year-old CZ ranks 32nd globally in wealth, with an estimated net worth of $41.1 billion, and Binance remains the world's largest cryptocurrency exchange.
However, many of the supporting letters describe CZ as someone who is indifferent to material possessions and fame.
One letter from He Yi states, "He knows nothing about the luxury items favored by the rich, such as jewelry, luxury goods, luxury cars, and art auctions. He leads a simple life, buying affordable clothes on Amazon, riding a balance bike to meetings, enthusiastically showing journalists his Toyota 6-seater van, which was later mocked by the media. He buys things for efficiency and interest, without a fanatical desire for money, fame, or enjoyment. He hopes to live a meaningful life."
"For the past 6 years as CEO and largest shareholder, he has taken a salary lower than the salaries of many executives brought in later by the company, and has not received any bonuses or cash-outs."
Heina Chen writes, "He does not have the air and demeanor of being superior to other CEOs of the world's leading exchanges. He is very humble and approachable, and the clothes he wears most often are purchased from Amazon, often costing less than $100."
Honesty and Integrity
Some of the supporting letters come from industry executives and investors who have known CZ for many years, describing the integrity he has always upheld, which also reveals some irregular practices and dark history of certain projects in the early days.
Page 340 of the documents reads, "When CZ learned that OKX founder Xu Mingxing Star XU falsified reserve certificates, had opaque finances, and used bots to falsify trading volumes, he left the company."
Page 66, Kee Lock Chua, CEO of Vertex Venture Holdings, a venture capital firm supported by Temasek, wrote that when Binance's application to register its services with the Monetary Authority of Singapore was rejected, it was because CZ held a controlling stake in other Binance entities, "Even though Binance Singapore had exhausted half of the investment funds, CZ decided to fully refund our initial investment. This was an unexpected move, demonstrating his thoughtfulness and sense of fairness."
Dedicated to Charity
Many of the letters supporting Zhao mention the significant charitable donations made by Binance and CZ. More than 50 employees of Binance Ukraine signed or wrote letters, describing the company's support for local employees during the Russia-Ukraine conflict.
Page 83 reads, "Binance Charity and CZ hope to contribute warmth and help to the world. Up to now, we have helped 2,085,823 beneficiaries around the world to get through difficult times, and we will continue this cause. This is how I see CZ in my heart, a great man with both the small love of loving employees, friends, and family, and the great love of helping the industry and people of the world."
With these supporting letters as evidence, along with CZ's apology, and the expertise of prison and security consultants, CZ's defense lawyers believe he should be given probation.
US Judge: Financial Crime "Unprecedented", Disrupting Sanctions
Prosecutors stated in their latest opinion letter to the court that CZ's violation of US law is "unprecedented in scale", and that Binance operates in a "Wild West" fashion, "intentionally disregarding" legal responsibilities.
Some of the more serious language in the letter includes: CZ allowed hackers, drug dealers, and violators of sanctions to transfer hundreds of millions of dollars through the exchange due to the lack of an effective anti-money laundering program. Binance "seriously undermined the effectiveness of US sanctions against Iran", and the judge also listed transactions worth at least $8.98 billion between US and Iranian customers.
The prosecutor said, "The judgment in this case not only sends a message to Zhao but also sends a message to the world."
How Does the Crypto Community Evaluate?
There is no absolute truth, only likes and dislikes, and one's position determines one's perspective, as the saying goes, "Your position determines your point of view." In this matter, the views of stakeholders and ordinary crypto traders seem to differ, with many KOLs expressing dissatisfaction with CZ on social media, but there are also completely opposite voices.
Crypto investor and Bankless co-founder Ryan Sean Adams said:
"CZ's crimes are completely different from those of SBF. SBF stole from his customers; CZ ignored their regulatory obligations. How the US court punishes the latter will tell us a lot. Binance received a $4.3 billion fine, one of the largest fines in history, and the US government hopes he will go to jail for three years. I don't know about you, but I think this is unfair..."
While these letters are moving to read, some members of the community also express that Zhao Changpeng is just a businessman, and Binance has engaged in activities such as using contracts to exploit retail investors, and the image of a good father/philanthropist cannot change the fact that many retail investors have been liquidated and bankrupted.
Legal Perspectives: Evidence of Money Laundering and Sanctions Violations is Key
The US Bank Secrecy Act requires financial institutions to take certain measures to prevent and stop money laundering, with a maximum penalty of five years' imprisonment for violations.
Moe Vela, former executive director of the Biden administration, told Bloomberg, "From a charge perspective, there is no comparison between the SBF and CZ cases, but from the perspective of the Department of Justice, the Securities and Exchange Commission, and the federal government, which have clearly stated that they will not tolerate wrongdoing, they are very comparable."
Vela added that regardless of whether the judge imposes a severe sentence on CZ, US authorities may be trying to send a message to illegal actors in the cryptocurrency field. However, he speculated that due to CZ's cooperation and admission of guilt, he may receive some leniency from the judge.
In similar criminal cases involving cryptocurrencies and money laundering in the past, prosecutors have sought heavy sentences, but these requests have been rejected.
For example, in a case very similar to CZ's last year, Arthur Hayes admitted to violating the Bank Secrecy Act
while leading the famous cryptocurrency exchange BitMEX. When probation officers suggested that Hayes not be imprisoned and instead be put on probation for two years (partly because Arthur Hayes had no criminal record), prosecutors strongly objected, begging the judge in the case to reject the proposal. Ultimately, the judge opted for a lighter sentence: Hayes was sentenced to six months of house arrest and two years of probation.
Like Hayes, CZ also has no criminal record and has agreed to pay a fine of up to $50 million, so many legal experts believe that CZ's sentence may include a combination of probation and house arrest.
Mark Bini, a former Assistant US Attorney for the Eastern District of New York, believes that unlike Bankman-Fried's criminal case, CZ feels more like a case of "regulatory crime," but events surrounding the conflict between Israel and Hamas may influence the judge's decision.
After the Hamas attack, many reports claimed that cryptocurrencies were being used to fund terrorist organizations. Bini said, "Public sentiment may be in line with the DOJ's view of this case, that there is a case against Binance, alleging money laundering related to Hamas. Similar things may be decided in some way to demonstrate the seriousness of seemingly regulatory crimes, and prosecutors may think that these consequences should be taken into account."
Bini added, "The facts of the case may be very important to the judge, but they may work against CZ in a way that the judge thinks requires a more severe sentence."
For the Department of Justice, imposing a longer prison sentence on CZ may not be as easy as it seems, as DOJ officials must provide more substantive evidence to prove his involvement in criminal activities.
John Reed Stark, a former SEC official, said on the X platform, "If the Department of Justice cannot ensure a conviction against CZ to deter future money laundering in the cryptocurrency field (and other fields), this 'plea agreement' may ultimately backfire on the Department of Justice. I hope the Department of Justice takes action, or demands for monitoring and other remedial measures from Binance may expose even more shocking and prosecutable criminal behavior. Otherwise, this will likely be just a blow to CZ, and sadly, it will be a unprecedented injustice."
Summary
In his letter to the court, CZ apologizes for his actions and expresses regret for having to give up a lifetime of work after resigning from Binance, hoping to focus on opportunities in education and biotechnology innovation in the future. He wrote, "I want to correct my mistakes, end this chapter, turn the page, and focus on the next chapter of my life."
On April 30th, Judge Richard Jones will hear statements from the prosecutors and CZ's lawyers at the Western District of Washington Courthouse. Whatever CZ's fate may be, let's wait and see.
As He Yi, co-founder of Binance, said, "If the cryptocurrency industry is likened to the Wild West, then CZ is the guardian of this wilderness." Regardless of the outcome, this judgment will be an important milestone in crypto history, deeply influencing the direction of crypto regulation and bringing new variables and challenges to the future of crypto innovation. |
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Post time 4-5-2024 13:24:37