Yahoo Finance Former Binance CEO faces four months behind bars
Each day, Coinrule will run through the state of the digital assets market for Blockbeat, your home for news, analysis, opinion and commentary on blockchain and digital assets.
On Tuesday, crypto took another blow from the US as industry icon “CZ” was sent to prison. This time it was Changpeng Zhao (CZ), the founder and former CEO of Binance, crypto’s largest centralised exchange, feeling the wrath of the US government. CZ received a four-month federal prison sentence for his role as CEO of the exchange and for breaching the Bank Secrecy Act. He will be the first CEO to go to prison for non-compliance with this act.
Binance’s leading role and incredible growth within the industry caught the attention of US law enforcement. According to court filings, CZ “prioritised Binance’s growth, market share and profits over compliance.” It also apparently had a “better to ask for forgiveness than permission” approach to following regulations. Authorities subsequently charged the exchange with allegedly failing to implement sufficient anti-money laundering prevention measures, operating an unlicensed money-transmitting business, and violating sanctions laws. For these violations, Binance had to pay an eye-watering $4.3 billion fine. CZ personally paid $50 million out of his $33 billion net worth, according to Forbes.
Compared to Sam Bankman-Fried, the former CEO of the now-defunct FTX, CZ remains widely respected within the crypto industry. Unlike FTX, Binance has so far kept customer funds “SAFU,” as CZ puts it. The Seattle judge ruling over CZ’s case stated he took his philanthropic history and previously clean criminal record into account when deciding the four month sentence. This was a major reduction from the prosecutors’ goal of three years. CZ’s friends and family provided the judge with a book containing 161 letters and character references. The judge stated that he had never seen so many letters for a defendant before.
In an X post, CZ suggested that his active participation in crypto has come to an end. However, he stated he will still remain a passive investor and hodler. Going forward, he will focus on education and building Giggle Academy with an aim of providing free education and lowering illiteracy rates.
In other news, trading began for the Hong Kong Bitcoin and Ethereum spot ETFs on Tuesday. Total trading volumes stood at a disappointing $11.4million. Bitcoin volumes represented $8.8 million, with $2.6 million for Ethereum. In comparison, the US Bitcoin spot ETFs had $4.6 billion of volume on their first day. But the comparison may be unfair. The US ETF market is around 13,000% larger at $6.5 trillion. Let’s see if Hong Kong’s appetite for crypto ETFs increases.
