The Seattle Federal Court ruled on Binance founder Changpeng Zhao (CZ) on April 30 local time. Unlike the 36-month sentence sought by the U.S. Department of Justice (DOJ), the presiding judge Richard A. Jones set the sentence at 4 months in prison on the charge that CZ (or Binance) violated the anti-money laundering provisions of the U.S. Bank Secrecy Act.
Later, CZ said on social media that he would serve his sentence and would focus on education. At the same time, he said that compliance is important for virtual currency exchanges, and that the close attention Binance received and the security of user funds during the incident (being prosecuted by the US Department of Justice) were crucial to (CZ's light sentence). Finally, CZ reiterated that he wanted to protect users.
The last sentence "Protect users!" inevitably reminds people of the fact that on March 28 this year, FTX's founder SBF (Sam Bankman-Fried) was sentenced to 25 years in prison for fraud and embezzlement of customer funds, resulting in a loss of more than US$8 billion.
It seems that CZ’s experience is not too bad, but the story is not over yet. Lawyer Liu sorted out the demands of different US law enforcement agencies on CZ or Binance, which may help us better understand the legal dilemma that virtual currency exchanges may face:
Some friends may think that what happened to CZ is quite similar to what happened to the U.S. “pig killing scheme”. Some articles even seem to be full of gloating. Liu Lu thinks these views are superficial (of course, this does not mean that my views are necessarily profound). What happened to Binance or CZ is essentially a stress response of centralized government agencies to the application of decentralized technology in finance, especially in the monetary field.
Virtual currency exchanges have to compromise when facing conservative and powerful governments. But the embarrassing thing is that virtual currency exchanges themselves are typical centralized institutions, which runs counter to the original intention of decentralization of virtual currency. Although its existence is reasonable at present, such as providing great convenience for virtual currency transactions between users. But in essence, it is difficult to escape the rut of centralization. CZ is not always spotless, and Binance is not the "flower protector" of the crypto circle. It's just that CZ did not touch too many red lines like SBF did.
From the perspective of regulators, whether it is the DOJ, SEC, CFTC in the United States, or the territorial jurisdiction, personal jurisdiction, protective jurisdiction, and universal jurisdiction in China's criminal law, the country's legislators and law enforcers can always find a basis to prove the legitimacy of their actions. In other words, at least in the eyes of many politicians, politics is the law of law, and law is a tool of politics (but Lawyer Liu still firmly believes in the law!).
The United States accused Binance of violating its Bank Secrecy Act anti-money laundering provisions, such as failing to inform U.S. authorities of nearly 100,000 transactions conducted by Hamas, ISIS, and the terrorist organization al-Qaeda using Binance; and failing to restrict $890 million in transactions between U.S. and Iranian users; in addition, Binance also earned huge fees from millions of transactions between users "including Cuba, Syria, and Crimea, Donetsk, and Luhansk in Ukraine." (Quoted from "The Trial of Zhao Changpeng | Prism", author Wen Shijun)
(Photos of CZ's trial circulated online, deleted if infringed)
According to some American lawyers, the way the Bank Secrecy Act was applied in the CZ case is not common in American judicial practice. Therefore, it cannot be ruled out that the CZ case was fabricated.
However, as mentioned above, the author's speculation is not to blame a certain government, because we cannot guarantee that CZ will be sentenced to less than 4 months in prison in other countries, and he may even be punished more severely. What the author wants to say is that it is still difficult for virtual currency exchanges and the decentralized virtual currencies behind them to be accepted by all governments in a short period of time. However, some people have expressed optimism - as the global financial hegemon, the United States does not seem to have made a fatal move against the "hegemon" in the virtual currency world, so does it mean that virtual currency is more and more likely to be accepted by the "mainstream world"?
But for true believers in decentralization, what does the “mainstream world” think? Who cares?
