His four-month sentence was vindication for the Binance founder’s legal strategy.
A contrite Changpeng “CZ” Zhao has been sentenced to four months in federal prison, for his apparently limited role in the illegal activity at Binance, the crypto exchange he founded in 2017. U.S. District Judge Richard Jones in Seattle specifically noted CZ’s many contributions to charity, as well as willingness to accept responsibility, all while downplaying the idea CZ had any foreknowledge that Binance was intentionally committing crimes.
Photos from Smorshedi/Wikimedia
The sentence is more than CZ’s lawyers had asked for (they were bargaining for house arrest at most), but less than both the official sentencing guidelines (around one year) and what U.S. Department of Justice prosecutors sought (36 months). We don’t know exactly why CZ received the sentence he did. But it’s notable that, instead of fighting extradition, CZ willingly came to the U.S. to stand trial. The outcome is the latest signal that if caught doing a crime, cooperate, cooperate, cooperate.
This is the plain and simple understanding drawn from comparing CZ to Sam Bankman-Fried, the founder and fraudster behind rival exchange FTX, who, in March, was sentenced to 25 years in prison, and never really admitted to his multi-billion dollar theft of client funds. CZ, of course, wasn’t accused of stealing from customers, but instead of failing to implement the necessary compliance infrastructure expected of a money transmitter.
For a prehistoric, i.e. pre-crypto, comparison: 20 years ago, Martha Stewart showed no remorse after being convicted of conspiracy and obstruction of justice, maintaining her innocence and even comparing herself to Nelson Mandela. She served five months in prison – a month more than CZ will.
It’s also worth noting that in addition to Zhao’s prison sentence to be served in Washington State, he paid a $50 million fine alongside the gargantuan $4.3 billion settlement agreement Binance paid.
Dennis Kelleher, co-founder of Better Markets, a public service nonprofit, says the relatively short sentence proves that “crime pays.” Zhao will be able to keep his ownership stake in Binance, the world’s largest crypto exchange by volume and vast personal wealth. DOJ attorney Kevin Mosley echoed this point: “Breaking U.S. law was not incidental to his plan to make as much money as possible. Violating the law was integral to that endeavor.”
