The founder of Binance Exchange, Changpeng Zhao (CZ), was recently sentenced to four months in prison for his violation of the Bank Secrecy Act (BSA).
This comes just a month after Sam Bankman-Fried (SBF), the now infamous ex-CEO of FTX Exchange, was sentenced to 25 years in jail for multiple counts of fraud, leading some to compare the two rulings.
Comparing Sentences
There is a stark difference between the jail sentence given to CZ compared to the one given to SBF, but there is also a fairly large difference in what the crimes were.
While CZ certainly failed to implement proper anti-money laundering (AML) policies for Binance during its early years as an exchange, there was nothing malicious done towards customers. There wasn’t very much regulatory clarity in Binance’s first years of existence, which is partially why they aren’t being accused of having any malice and is instead seen as just a lack of compliance.
CZ also pleaded guilty to a count of violating the Bank Secrecy Act back in November 2023, while SBF didn’t plead guilty and instead went to trial.
SBF’s sentence of 25 years is based around his crime affecting many customers and investors, and knowingly defrauding them. It became clear during his trial that he knew what he was doing and he still never showed any remorse in having hurt so many lives with his actions.
A Difference in Attitude and Support
Many have attributed the stark difference between the sentences of CZ and SBF to come down to a difference in attitude presented by each ex-CEO, along with the characterizations made by family and friends.
CZ pleaded guilty fairly quickly in fall of 2023 and began cooperating with the Department of Justice. He also decided to stay in the United Arab Emirates which has no extradition treaty with the US, leading prosecutors to claim he would flee the law.
He didn’t. He showed up to his court dates in the US as promised. He apologized for his actions. Judge Richard Jones, who was presiding over CZ’s case, spent a whole weekend reading through letters of support from CZ’s family and friends. Jones said, “I don’t think I’ve ever seen a volume of letters” consistent in their characterization of a passionate if flawed defendant.
SBF, in contrast, didn’t plead guilty, instead trying to win a legal battle in a trial that was likely impossible to win. He wasn’t cooperative, or even remorseful for what he did.
“SBF resolutely did not settle, violated his bail conditions, spoke frequently to the press in his own favor and seemed to lack a display of genuine, heartfelt remorse even at his own sentencing,” said Yesha Yadav, law professor and associate dean at Vanderbilt University.
Judge Lewis Kaplan, who sentenced SBF, noted during the sentencing hearing that he had never heard “a word of remorse for the commission of terrible crimes” from Bankman-Fried.
Perhaps the nail in the coffin for SBF was the lack of support from those close to him. While his parents defended his character, everyone else close to him didn’t. This includes his ex-girlfriend and ex-CEO of Alameda Research, Caroline Ellison, who was the prosecution’s main witness. There were many who expressed their concerns with SBF’s actions, and how he knew what he was doing and how he didn’t seem to care.
Closing Thoughts
In the end, it was the testimony of SBF’s colleagues in combination with his crimes and lack of remorse or cooperation which resulted in his 25 year prison sentence.
Some may say the CZ’s sentence is too light, but considering the considerable fines CZ and Binance have already paid, it was more than in line with previous violations of the Bank Secrecy Act. The BSA has actually never had a prison sentence attached to its violation before CZ, something his team pointed out during their defense, and is why four months seems justified.
For CZ, unlike SBF, the testimony of his colleagues and close friends played a large role in the length of his sentence, and it will be interesting to see what he does when he is finished serving his time.
