Binance’s Big Blunder: A Simple Mistake with Huge Consequences
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Binance co-founder Changpeng Zhao, or CZ, faces the possibility of a three-year prison sentence following charges related to Binance’s compliance controls. In a letter to U.S. Judge Richard A. Jones, CZ expressed regret and took responsibility for the lapses. His admission of failure to establish compliance controls at Binance underscores the seriousness of the situation.
Along with his letter, 161 letters of support submitted by Zhao’s associates reveal his private life and character. They describe Zhao as a family-oriented man, uninterested in extravagance and deeply committed to charity, starkly contrasting his current legal troubles. The support extends from family members and industry bulls to former colleagues and employees.
Legal Team Has Not Given Up!
However, Zhao’s legal team is countering with a sentencing memo, highlighting that no other defendants in similar cases of violating the Bank Secrecy Act (BSA) had received prison sentences. They proposed probation for Zhao, citing his clean record and acknowledgment of wrongdoing.
The outpouring of Support for CZ Ahead of Sentencing
Dozens of letters penned by family, friends, Binance employees, volunteers, users, and notable figures in the industry and government underscore the impact of Zhao’s character and actions.
One notable contributor to the letters of support is Yi He, CZ’s wife and Binance co-founder, who acknowledged the mistakes at Binance while emphasizing Zhao’s fairness, integrity, and sense of responsibility. She highlighted how past incidents, like Binance’s failed attempt to rescue FTX in 2022, prompted Zhao to enhance transparency and accountability measures within the exchange.
Among the voices backing Zhao are industry stalwarts like Samson Mow, CEO of JAN3, Val Vavilov, CEO of Bitfury Group, and Richmond Teo, CEO of Paxos Asia. Their letters collectively paint a portrait of Zhao as a dedicated CEO and family man who lives a modest life marked by honesty, hard work, modesty, and discipline.
While some letters implicitly call for leniency, CZ refrains from explicitly seeking a reduced sentence in his missive. The US Department of Justice is pushing for a 36-month prison term and a $50 million fine against Zhao, underscoring the gravity of the situation.
Despite the challenges, Binance and CZ have paid a heavy price for their shortcomings. Despite supporters’ pleas for leniency, the US Department of Justice is seeking a longer sentence than initially expected. With the sentencing set for April 30, the outcome could have bigger implications for Binance in the US.
