In a federal court in Seattle on April 30th, Binance founder and former CEO CZ was officially sentenced to four months of imprisonment for violating anti-money laundering laws. As a former leader of the world’s largest cryptocurrency exchange, CZ admitted to violating the Bank Secrecy Act in his platform operations.
This case not only reflects the strict attitude of the US Department of Justice towards cryptocurrency exchanges, but also has the potential to have a profound impact on the global cryptocurrency market.
For Binance itself, the transition away from CZ has been smooth, as its market position and business data have not only remained stable but also increased. This further confirms Binance’s emphasis on user fund security and brand stability.
Previous Reports
Odaily Daily previously reported that Binance and its CEO CZ reached a settlement with multiple US regulatory agencies on November 21, 2023, admitting to criminal charges of money laundering and violating US sanctions, and agreeing to pay over $4 billion in fines. CZ also agreed to step down as CEO and pay a $50 million fine.
This marked the formal end of the investigation into Binance that had lasted for years.
In this case, Binance was charged with money laundering violations, operating an unlicensed money transmission business, and violating US sanctions. Binance admitted that its platform failed to prevent and report suspicious transactions related to terrorist organizations, involving over 11 million transactions with a total value exceeding $898 million.
Of the fines, $3.4 billion will be paid to the Financial Crimes Enforcement Network (FinCEN) of the US Treasury Department, while $968 million will be paid to the Office of Foreign Assets Control (OFAC), with Binance required to comply with a series of strict sanction compliance obligations. The US Treasury Department stated that this is the largest fine in FinCEN’s history.
CZ announced his resignation on X platform and was replaced by Richard Teng as the new CEO. CZ stated that he would take a break and possibly engage in passive investments, focusing on start-ups in the blockchain/Web3/DeFi, artificial intelligence, and biotechnology fields.
Subsequently, CZ posted a $175 million personal bail bond, but was not allowed to return to the United Arab Emirates. The US requested that CZ hand over all passports, whether valid or expired, to a third-party custodian and provide notification of compliance with all requirements.
Sentencing Hearing
At the sentencing hearing held today, the US Department of Justice (DOJ) and CZ’s defense lawyer debated the length of CZ’s sentence for his violation of the Bank Secrecy Act after pleading guilty in November of last year. According to a plea agreement released in November, CZ had the right to appeal any sentence exceeding 18 months, but the DOJ requested a 36-month sentence in a sentencing memorandum released last week. The defense requested a sentence of house arrest and probation instead of imprisonment. According to documents submitted by the defense last week, the probation office recommended a sentence of five months.
According to experts cited by Coindesk, the DOJ is trying to send a deterrent message with a sentence of about three years. “The government wants to make sure that these lower guidelines don’t make anyone feel like they can just flout our anti-money laundering measures,” she said. “Usually when we negotiate pleas, we negotiate things like the amount of loss and arguments that each side might be able to make. I don’t see anything in this memorandum that indicates that they’re limited to 18 months.”
Prosecutors also stated that this level of sentencing sends a message that industry leaders “need to make the right choices every time, which is to comply with the law.”
The judge stated that there is no precedent for imprisonment of the defendant in such cases. Ultimately, the judge rejected the DOJ’s request for a 36-month sentence and chose to sentence CZ to four months of imprisonment.
At the same time, the judge mentioned that he had read all 161 letters submitted because “it is important to understand who you are.” He also mentioned, “I have never seen so many letters, not only from family members but also from people who have known you for a long time.” The judge pointed out that these letters depicted a person driven by motivation, passion, and determination. The judge said, “You risked all of your net worth just to make Binance succeed.” He also mentioned that the letters clearly showed that CZ is a person dedicated to his family and cited examples of Binance’s charity work.
CZ’s Response to the Case
In the defense, CZ’s lawyer cited his “unwavering” acceptance of responsibility, the $50 million criminal fine he paid, and the absence of any cases where a similar defendant was imprisoned to argue for the shortest possible sentence for CZ. The lawyer also mentioned that it was under CZ’s leadership that Binance became a compliance leader in the industry, “despite the initial failures that led to this prosecution.”
In a letter publicly released last week, CZ also apologized for his “terrible decisions” and took “full responsibility” for his actions. In the letter, he admitted that he should have implemented compliance reforms at Binance from the beginning but failed to do so and did not establish necessary compliance controls. He expressed regret for this part of the Binance story that cannot be changed. However, under his leadership, Binance has implemented the strictest anti-money laundering controls since 2022 and has become a leader among non-US exchanges. “I have no excuses for not establishing the necessary compliance controls at Binance,” CZ promised that this will be his only “encounter with the criminal justice system.”
At the same time, in the 350-page plea letters from various individuals, we can also see another side of CZ’s career: one letter written by his sister, former Morgan Stanley executive director Jessica Zhao, describes how Binance handled a large number of customer withdrawals after the FTX incident in 2022. Jessica emphasized that despite facing technical pressure, CZ remained calm and ensured the safety of all customer funds, demonstrating his leadership and commitment to customers.
After the earthquake disaster in Turkey, CZ not only personally donated nearly $5 million but also launched the Binance Charity Foundation, using Web3 technology to support relief work and expand the scope of assistance. This not only supported thousands of victims but also innovatively extended the fundraising and distribution of relief funds by opening cryptocurrency accounts for non-governmental organizations.
During the Russia-Ukraine war, CZ’s attitude towards the team also demonstrated his people-oriented leadership style and high regard for employee safety. He personally organized task forces to ensure necessary support for Ukrainian team members. At the same time, through collaboration with various international organizations through Binance Charity, large-scale humanitarian aid was provided to Ukraine, directly providing economic support to thousands of refugees and displaced persons through cryptocurrencies.
These letters together depict a person who demonstrates a high sense of responsibility and integrity in both business and personal ethics. CZ has not only demonstrated outstanding abilities in technology and financial management but also shown profound self-reflection and pursuit of integrity in his personal behavior and decision-making. These descriptions provide the audience with a comprehensive and nuanced perspective to understand the complexity and core values of this important figure in the cryptocurrency field.
The Future of Binance Remains Uncertain
Although CZ has stepped down as CEO of Binance, the market position of Binance has not been significantly affected, and it still remains the world’s largest cryptocurrency exchange. According to data from Coingecko, Binance’s 24-hour trading volume remains above $16 billion, with monthly visits reaching 101 million, maintaining a stable lead globally. Especially since November last year, there has been no downward trend in trading volume due to legal events, and there has been no panic outflow. Instead, driven by the bull market cycle, the trading volume surged to $68 billion in March this year, setting a new record.
As stated in Binance’s announcement released in November last year, “We always adhere to the core values of user safety and security. We take the responsibility of custodianship very seriously and provide 1:1 support for the assets of every user. * This means that users can withdraw 100% of their assets from the platform at any time. It is worth noting that in our settlement with US institutions, they did not accuse Binance of misappropriating any user funds or participating in any market manipulation.”
Binance has bravely faced global regulatory challenges, actively engaged in dialogue with regulatory agencies, and is committed to exploring sustainable compliance paths for the cryptocurrency industry. This not only maintains the stability of the platform and user confidence but also provides important reference for the long-term development of the entire cryptocurrency market. With this open and cooperative attitude, Binance demonstrates its maturity and wisdom as an industry leader, further consolidating its leadership position in the global cryptocurrency market.
