Binance exchange founder Changpeng Zhao (CZ) has reportedly entered a federal prison in California, USA.
Last November, Zhao Changpeng reached a settlement agreement with the US government to resolve the multi-year investigation against Binance. As one of the conditions of the settlement, Zhao Changpeng resigned as CEO of Binance. Although he no longer directly manages the company, he still holds about 90% of the shares and is still the actual controller of Binance.
Zhao Changpeng was accused of failing to implement an effective anti-money laundering program as required by the Bank Secrecy Act and allowing Binance to process transactions involving proceeds of illegal activities. The U.S. government required Binance to pay $4.3 billion in fines and forfeitures, while Zhao Changpeng personally agreed to pay a $50 million fine.
In April this year, Zhao Changpeng was sentenced to four months in prison for pleading guilty to money laundering charges. The sentence was far less than the three-year prison sentence requested by federal prosecutors. Before the sentencing, Zhao Changpeng told the judge that it was his fault for failing to implement an adequate anti-money laundering program and that he deeply regretted it.
Finally, CNBC reported this morning that Changpeng Zhao has reported to a low-security federal prison in California, and his defense law firm (Latham & Watkins) has also confirmed the news. In other words, CZ is expected to be released from prison in October this year and re-enter the cryptocurrency industry. This incident reflects the challenges faced by the industry in regulatory issues such as anti-money laundering, and also shows that the government and enterprises can achieve a win-win situation through coordination and cooperation.
Additionally, FTX founder and former CEO Sam Bankman-Fried is serving time in a U.S. federal prison. Bankman-Fried was convicted of seven counts in November and sentenced in March to 25 years in prison for securities fraud conspiracy, a move that bankrupted his cryptocurrency exchange and related hedge fund Alameda Research.
At his sentencing in Manhattan federal court, Bankman-Fried was also ordered to pay $11 billion in forfeiture taxes. Unlike Zhao, Bankman-Fried did not reach an agreement with the government. Instead, his other executives cooperated with prosecutors, and Caroline Ellison, former Alameda CEO and Bankman-Fried's ex-girlfriend, was the government's star witness during his criminal trial.
So why did the judge give Zhao Changpeng a lighter sentence? The prosecutor had originally requested a 36-month sentence, so why did the judge only sentence him to four months? According to a detailed analysis of the trial documents on social media, three key factors played a decisive role in this verdict.
First, the defendant CZ took the initiative to surrender and actively cooperated with the investigation throughout the process, which showed his respect for the law and his responsible attitude. The defendant took the initiative to go to the United States from the UAE to accept the judicial trial, which received widespread attention and recognition during the trial. At the same time, the defendant's family environment is stable and he has minor children to support, which also aroused the judge's sympathy during the sentencing stage.
Secondly, Binance, represented by the defendant, agreed to pay a settlement of up to $4.3 billion, which shows the defendant and his company's awareness and sincerity of their actions. The compensation is not only an apology for the defendant's criminal behavior, but also reflects the defendant's good cooperation with the government.
Furthermore, the 161 letters of recommendation supporting the defendant came from many important people and groups, and the content involved positive comments on the defendant's family, career and social reputation, which had a significant impact on the judge. The judge personally took the time to read these letters carefully and was deeply moved by them.
Finally, when sentencing, the judge also fully considered the defendant CZ's good background of no criminal record in the past, and believed that he had shown awareness of his wrong behavior and an attitude to correct it, which was another important factor in lenient punishment.
In summary, the court finally made a decision of lighter punishment after weighing the defendant's fault, confession attitude, compensation measures and social support. This reflects that the court not only pays attention to the facts of the crime when making a judgment, but also pays attention to the comprehensive assessment of the defendant's overall performance and social evaluation.
Four months later, CZ will be back. Zhao Changpeng was restricted from traveling for many months before being sentenced. In March, he decided to start Giggle Academy, which provides free online courses for students in grades 1 to 12. Zhao Changpeng said this is the most influential thing he can do for the next chapter of his life.
Later, Zhao Changpeng also publicly issued an apology letter, saying that he would take all responsibility: Because I want to resolve this issue in front of the court and start over. I want to correct my mistakes, turn the page, and start the next chapter of my life.
CZ pointed out in the letter that he hopes to fund small research laboratories and use blockchain technology to provide medical services to billions of people around the world. He will also continue to invest time and energy in helping young people and improving education and the living standards of disadvantaged youth.
We also look forward to seeing CZ officially get rid of the shadow of the past and start a new chapter in life in four months.