Binance’s Big Blunder: A Simple Mistake with Huge Consequences

Binance Faces Three Criminal Charges as CEO CZ Resigns and Pleads Guilty

Changpeng Zhao, founder of Binance, faces up to 3 years in prison for failing to implement proper compliance controls at Binance.
Zhao's supporters submitted letters highlighting his good character and regret, while his defense team argues for probation.
Despite facing a harsher sentence than expected, the outcome of the case could have major consequences for Binance's future in the US.

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.

The Power of Support

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.

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.

Read About This: DOJ Pushes for Harsh 3-Year Prison Sentence for Binance Founder “CZ”

From Family to Industry Titans

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.

Binance co-founder He Yi said that CZ’s biggest mistake was ignorance. As a startup with no fancy background, the founding team members had no legal background, and even most of the early management team members, except CZ, could not even read English. Both Binance and CZ have…
— Wu Blockchain (@WuBlockchain) April 25, 2024

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.

It’s Not Been Easy for Binance

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.

Do CZ’s good deeds outweigh his compliance failures?