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How Changpeng Zhao’s ‘Good Guy’ Reputation Secured a 4-Month Prison Sentence
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Ex-Binance CEO Changpeng Zhao may be off to federal prison for financial crimes that led the cryptocurrency exchange he founded to agree to pay a $4.3 billion fine. But his reputation, at least in a Seattle courtroom on Tuesday, was never better.
The judge, CZ’s defense lawyers and even prosecutors acknowledged during the 2 1/2 hour sentencing hearing that this 47-year-old billionaire was not your run-of-the-mill criminal defendant. Instead, he was a philanthropist, a do-gooder, a first-time lawbreaker and family man who turned himself in to accept whatever may come.
This unexpected resuscitation of the crypto kingpin’s reputation factored into his fate: a tremendously light sentence of four months, far less than the three years prosecutors sought to punish – in their telling – this historically egregious violation of the Bank Secrecy Act (BSA).
U.S. Judge Richard Jones, 74, had none of it. “To be honest with you, sir, everything I see about your history and characteristics are of a mitigating nature,” he said to Zhao near the start of his sentencing. He recalled going through a book of glowing sentencing letters that CZ’s friends and family had submitted.
Not everything worked out for CZ in court. He’s still due to spend four months in prison for failing to implement effective money-laundering controls as CEO of Binance, the world’s largest crypto exchange. A source at the U.S. Department of Justice said he’s the first CEO to go to prison under the BSA.
If the court proceedings were the model of the man, though, CZ will enter prison rejuvenated.
“Lots of really good people do bad things and violate the law,” prosecutor Kevin Mosley told Judge Jones when asked if his team’s sentencing recommendation factored in CZ’s prolific global philanthropy efforts. CZ’s lawyers later called out Mosley’s unconvincing insistence that it had.
Judge Jones said he spent the weekend poring over the voluminous letters of support for CZ from friends and family until the book they were contained in literally fell apart. “I don’t think I’ve ever seen a volume of letters” consistent in their characterization of a passionate if flawed defendant, the judge said.
CZ leaned forward in his seat throughout Judge Jones’ sentencing remarks. He nodded every time the judge pointed out the former CEO’s instances of wrongdoing. His body language telegraphed he anticipated the light sentence he got; it was almost like CZ knew what was coming when he flashed those four fingers months ago.
“You risked your entire net worth to make Binance a success,” Judge Jones said at one point.
Naturally, the most sterling representations came from CZ’s own legal team. They reminded the judge repeatedly that Zhao had been living in the United Arab Emirates, a country with no extradition treaty with the U.S. His massive fortune could have funded a lifestyle on the run, they said. But he cracked a deal with prosecutors instead.
That, the support letters, his “extraordinary” cooperation with the government and a whistle-clean past (“No criminal history, no fraud, no other crimes,” as defense lawyer William Burke put it) led Judge Jones to impose a light sentence, he said.
Still, CZ’s hubris worked against him. “The mere fact that you can place your name next to the largest crypto operation on the planet does not give you discretion to pick and choose which regulations to follow,” Jones said, adding that wealth and power did not free CZ from following the law.
The whole thing makes CZ’s coming prison sentence likely to be more of a blip in his story than the end of his line. As the billionaire himself pointed out, he’s spent the past few months working on a global online education initiative for children. He seems likely to return to that work on the other side. That could come perhaps even within the year.
