CZ is wise, the opposite of SBF. He willingly pled guilty and got to keep his Binance majority stake worth tens of billions. He didn't run his mouth endlessly and gift a case to prosecutors like SBF did. Most importantly, he let people trade shady shitcoins but never stole customer funds.
He'll spend just four months in a minimum security prison, come out and sail into the sunset with his billions. If you make things easy for prosecutors, especially as a first-time offender, they'll make things easy for you.
I don't admire crypto, but CZ played his cards well. Bloomberg quipped that he'll hold the title of richest inmate in the US, lol
That 4-month jail term didn't come free: he's also paying a $4bn fine to the DOJ, which is likely a big chunk of the money he made. Binance is also being pushed out of operating in a lot of countries, so he won't have the same potential to make billions more in what was a Wild West market.
For clarity, he's paying a $50M fine; Binance is paying a multi-billion dollar fine. The latter is not measured against the "money he made", but instead the value of Binance.
Except for the possibility of extortion while in prison.
I would bet if he had to do this again CZ would never have left UAE. There is no extradition treaty. He was expecting _no_ prison time.
He may be wealthy but he will always be a criminal who achieved wealth by knowingly doing business with criminals, got caught and served time in federal prison as a result.
It sounds to me as if this parent comment is expressing admiration. For a convicted criminal.
> Most importantly, he let people trade shady shitcoins but never stole customer funds.
Can't highlight your "most importantly" enough. At the end of the day, CZ didn't follow regulations, which certainly gave lots of shady characters access to money transfers who otherwise would have been blocked had those regulations been followed. But for everyday joes that just gambled and lost, it's hard to feel much sympathy (especially since plenty have gambled and won). But unlike FTX, Binance didn't flat out commit theft. Do that with enough money and you're screwed.
> But unlike FTX, Binance didn't flat out commit theft.
Is that true? I believed they took 'loans' out of customer funds then manipulated the markets to close the holes-- sounds a lot like what FTX was attempting but without being so amphetamine addled that they couldn't pull it off.
wholey hell does crime ever pay. I bet upwards of 80% of the working population would gladly do 4 months of time to never have to work another day in their life
Seriously who wouldn't take that trade haha. That being said, I think it takes a certain kind of person to do all of this stuff and not fold to the stress in the first place
> Most importantly, he let people trade shady shitcoins but never stole customer funds
This undersells his crimes and overstates SBFs. The head of compliance for Binance sent a freakin text message to a peer saying "We’re operating an unlicensed broker in the US, bro" along with numerous communications about intentionally facilitating money laundering, sanctions evasions and a host of other securities law violations.
SBF, based on what was published in Michael Lewis' "Going Infinite", didn't really steal customer funds, he just did a negligently bad job of running the bank of crypto. When you put money into your checking account, the bank doesn't hold it in a vault, they re-lend it out as mortgages and car loans and small business loans. They just do it competently, and under the scrutiny of bank regulators and insurers. FTX was an unregulated crypto bank in the bahamas that did conceptually the same thing, just without any prudent risk management, due diligence or even reliable record keeping. But the customers were cool with that, because crypto and number go up.
> along with numerous communications about intentionally facilitating money laundering, sanctions evasions and a host of other securities law violations
He turned himself in, plead guilty and presumably provided law enforcement with a decade’s worth of easy convictions. I’m not convinced Zhao will be a pest on release. I’m not convinced SBF won’t be even half a century on.
> didn't really steal customer funds, he just did a negligently bad job of running the bank of crypto
No, he absolutely stole the money. Lending yourself money from the coffers is embezzling, full stop. It also seems clear he knew what he was doing was wrong, given the bizarre series of lies and obfuscation that he started making before being indicted and while on the stand.
> I’m not convinced Zhao will be a pest on release
He will, as long as he believes that he can do something without getting caught. He probably just decided that giving himself up and pleading guilty was the more rational choice the time and would allow him to get back to being a fulltime grifter much sooner
> When you put money into your checking account, the bank doesn't hold it in a vault, they re-lend it out as mortgages and car loans and small business loans. They just do it competently, and under the scrutiny of bank regulators and insurers.
A bank CEO can definitely not lend customers' money to themselves with fake assets (shitty tokens) as collateral, likely without intention to repay. SBF was a thief, full stop.
Except they were an exchange not a “bank” who promised and contractually made out that customer funds were segregated and not re hypothecated. Both demonstrably false assertions that enabled significant fraud.
CZ got very lucky (by virtue of an excellent legal team) here, but that doesn't diminish Sam's faults.
It seems unwise to based your opinion of SBF on “Going Infinite” especially given that the court case established he stole customer funds, not that he’s a silly boy who doesn’t know how to keep the books straight.
Given required capital rules, your bank deposit analogy is so wide of the mark it’s hard to know where to start but one thing a bank doesn’t do with customer funds is give them to a hedge fund which is allowed to run an almost infinite negative balance. If you own and run that hedge fund that isn’t poor record keeping or poor risk management it’s stealing customer funds.
If you’re going to bring the “unlicenced broker bro” message in Binance up it seems remiss not to mention that SBF and Caroline Ellison and others coordinated the transfers between FTX and Alameda in a Telegram chat group called “Wire Fraud”.
>“Zhao bet that he would not get caught, and that if he did, the consequences would not be as serious as the crime,” the memorandum stated. “But Zhao was caught, and now the Court will decide what price Zhao should pay for his crimes.”
4 months, 50mn in personal fines, and 4.3bn in fines by Binance corporate.
Well, the real crime there was blatant tax evasion.
It always astounds me what these kinds of people think they can get away with. In this case, a guy going by the name of "Bitcoin Jesus" reported that he didn't own any bitcoins, and expected the US government to take that declaration at face value. Trying to defraud the US government in such a blatant way as to insult its intelligence usually doesn't end well.
I dunno, look at the long list of things he hasn't been charged with: He laundered money for the MTGox hacker ( https://www.coindesk.com/consensus-magazine/2023/06/09/where... ), he promoted numerous ponzi schemes (including ones with billion dollar scale losses), he essentially robbed Coinflex to the tune of 42 million dollars and put them into bankruptcy, took some 20 million dollars from genesis trading.
Even with the tax evasion thing-- as soon as he did it he setup a 'passports for bitcoin' site promoting buying St. Kitts passports for the purpose of evading US taxes. It wasn't a revelation that he evaded exit taxes. Had someone without hundreds of millions done the same thing they would have been charged a decade ago, but to make charges stick against the well resourced is another matter. In this case they apparently felt they had to raid his communications with his attorneys to get the job done (notice the indictment is stuffed full of what plainly appears to be privileged communications).
All stuff that is widely known to the public--- over and over again it seems the world has taught him that he can do whatever he thinks will benefit him and suffer little negative consequences.
nikcub, if you read the indictment carefully, it sounds like he didn't sell most of those coins until 2017 (which makes sense on the whole backing BCH front) -- which would have been a much better Bitcoin price. BCH OTOH is trading for about 11% of what it was then.
So it sounds like instead of paying a few million in exit taxes, he instead created a much larger tax liability and then spent much of the proceeds on a losing long shot bet. I mean, I guess kudos to him for eventually putting his money where his mouth was.
Crypto was trash but it did result in subtitles like 'Man Known as “Bitcoin Jesus” Evaded Nearly $50M in Taxes' on government websites which is frankly excellent
> Binance’s billionaire founder Changpeng Zhao was sentenced to four months in prison on Tuesday, after pleading guilty to charges of enabling money laundering at his crypto exchange.
Will CZ be the richest person ever sent to Federal prison? Forbes says his networth is $33 billion (though given crypto volatility that could be anywhere from 1/10 to 10x that on a daily basis...).
Imagine the security protocols for something like that. For sure he's not going to be the general population.
The wealthiest American banker should be Andy Beal ($10 billion+), and that's because he wholly owns a big bank [1].
For reference, Jamie Dimon has been CEO of JP Morgan (America's largest bank) for nearly two decades and controls $1 billion in shares. Yeah, they're all mega-rich, but there's a big difference between someone having $1 billion and $30 billion. The latter can spend the former's entire assets in a year and still become wealthier over time.
You're still pointing out individuals. In my eyes, the sum of the whole lot should have gone to jail long ago. Dimon and a whole bunch of other execs with him.
He's going to club feds. It's not even a prison, there's no fence you can literally walk away if you're stupid. Easiest prison time ever, no need for any crazy security protocol, he will be in there with non violent offenders, plenty in for financial crime, etc.
It's not that interesting of a case really. Basically
>Zhao reportedly said earlier Tuesday in court. “Here I failed to implement an adequate anti-money laundering program... I realize now the seriousness of that mistake.”
I don't admire crypto, but CZ played his cards well. Bloomberg quipped that he'll hold the title of richest inmate in the US, lol