The Coincidence of Two US-Bound Financial Transactions: CZ vs SBF in the Binance Experiment
Hundreds of millions of dollars in transactions involving US-backed entities, including Iran and Cuba, were able to be made through the Binance platform because of a guilty plea by the leader of the platform. The company had to make a $4.3 billion penalty and have the chief executive step down as per the plea deal.
As a part of the agreement, Binance now has an “independent compliance monitor” inside the company. I assume that means every governmental alphabet soup agency now has eyes on every trade made on the exchange, both in the past and for the next three years, along with identifying information as required by the exciting new anti-money laundering measures at Binance. That kind of surveillance is not nothing for the United States government.
Richman says that the judge would have had a hard time differentiating between the willingness of Zhao to plead guilty and take responsibility and his disregard for the law. Richman said that the respect for the law would loom large in the sentence the judge imposed.
The number ofcryptocurrencies facing criminal sentencing in the US is on the rise. SBF, the founder of FTX, was sentenced to 25 years in prison on March 28. The pair fought for control of the exchange market before they fell from grace. The similarities between the cases are over.
According to Daniel Richman, professor of law at Columbia University, a judge had to consider more than the facts of the crime in coming to an appropriate sentence for Zhao. That includes the character of the defendant, the likelihood of recidivism, past infractions, and other factors.
The deal that led to his guilty plea was a pretty sweet one. He had to pay a huge fine and then step down as CEO of Binance, a company that is worth $33 billion. I found the emphasis on the word “cooperation” and references to a sealed matter to be important points during his hearing.
“It’s an easy comparison, but an imperfect one,” says Daniel Silva, an attorney at law firm Buchalter and former US prosecutor. CZ pleaded guilty to not following the law for a financial institution executive. SBF was different: He was improperly using customer funds, gained through fraudulent statements and material omissions of fact.”
In their own presentence filing, Zhao’s counsel made a thinly-veiled reference to the distinction. “Mr. Zhao has been convicted only of an AML [anti-money-laundering] compliance failure,” they wrote. “He has not defrauded any investors, there has been no misappropriation of customer funds.” They appeared to say that their client was not a SBF.
Last year, the DOJ secured few landmark Crypto convictions and they will celebrate the conviction. “Whether people criticize the sentence as too light, it sends a healthy message,” says Silva. The aim is to frighten the next financial institution CEO into complying with anti-money-laundering regulations.
Judge Richard Jones, who presided over the sentencing hearing in the Western District of Washington on Tuesday, handed down a lighter sentence than the three years petitioned by the prosecution.
What do you need to know about Iran and North Korea? — Zhao, Bankman-Fried, Zhao, China, Beijing, South Korea, China
There’s more. When he spoke in his own defense, Zhao wore a navy suit with a blue tie. Bankman-Fried was shackled and in prison garb.
I am not sure if it is Iran or North Korea, but there could be useful information on those countries. In court, I found myself wondering if there’s information on China up for grabs as well.