Syed Rahman considers the sentencing of former Binance CEO Changpeng Zhao.
The former CEO of crypto exchange Binance, Changpeng Zhao, is beginning a four-month jail sentence.
The billionaire founder of the largest exchange (in terms of daily trading volume of cryptocurrencies) was sentenced in the United States after pleading guilty to charges of enabling money laundering.
Sentencing Changpeng Zhao, District Judge Richard Jones said: “You had the wherewithal, the finance capabilities, and the people power to make sure that every single regulation had to be complied with, and so you failed at that opportunity.”
The four-month sentence was much less than the three years that federal prosecutors had been seeking for him – and more than the five months of probation the defence had sought.
Polarised
This is a case that shows that US regulators are taking crypto-related violations increasingly seriously and are not hesitating to use the powers afforded to them.
The US Department of Justice (DOJ) was looking to make a statement with Changpeng Zhao’s sentencing. Before this sentence had even been announced it could be argued that the DOJ had achieved its goal – to warn other crypto firms to comply with the regulations and not follow in Binance’s footsteps.
The case has highlighted the polarised views surrounding crypto. Prosecutors called for a sentence for Changpeng Zhao that is twice the recommended sentence under federal guidelines, citing a blatant disregard for compliance with money laundering regulations. In contrast, many called for leniency, based on Zhao and Binance’s guilty pleas, his apology and accepting of full responsibility and Binance’s payment of $4.3 billion in a recently-agreed plea deal.
Prosecutors were looking to paint a picture of Binance having an opaque corporate governance structure and no clearly-recognised base, while working in a market similar to the Wild West. The Wild West reputation has been something that has followed the crypto market for many years – and this case will do little to extinguish it.
The nature of many transactions cited in this case – with links to groups such as Hamas, al-Qaida and ISIS – may confirm the views that many hold regarding crypto. For many within the market, however, it could yet prove to be a pivotal moment in how they recognise and respond to the risks that exist within it.
