6 ms·

Binance founder Changpeng Zhao sentenced to four months in prison

79 points by SirLJ 2y ago

koolba 2y ago
> 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.
- latchkey 2y ago
  > Will CZ be the richest person ever sent to Federal prison? Maybe because no bank execs ever go to jail?
  - gvhst 2y ago
    Even if bank execs went to jail CZ is still wealthier
  - blackhawkC17 2y ago
    No U.S. bank executive is worth over $30 billion.
    - latchkey 2y ago
      select sum(us_bank_executives) where year >= 2007
      - blackhawkC17 2y ago
        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. 1- https://www.forbes.com/profile/andrew-beal/?sh=468364783067 https://www.forbes.com/profile/andrew-beal/?sh=468364783067
        latchkey 2y ago
        Beal is a standout cause he actually predicted and prepared for the mess. https://www.forbes.com/2009/04/03/banking-andy-beal-business-wall-street-beal.html https://www.forbes.com/2009/04/03/banking-andy-beal-business... 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.
        mtmail 2y ago
        Charles Schwab is also said to be worth $10 billion.
    - exe34 2y ago
      Not officially anyway, if their money is in tax havens.
- segmondy 2y ago
  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.
- rchaud 2y ago
  Forbes net worth estimates are about trustworthy as Tether's 'attestations'.
- solumunus 2y ago
  > 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...). Huh?!
gnabgib 2y ago
(edit) Seems the discussion is here vs https://news.ycombinator.com/item?id=40215052 https://news.ycombinator.com/item?id=40215052
- deleted 2y ago
  [deleted]
htrp 2y ago
>“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.
blackhawkC17 2y ago
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
- throwup238 2y ago
  > He'll spend just four months in a minimum security prison Probably on work release during the day. It's not even a time out. He's just going off to sleep at summer camp for a few months.
- ai_what 2y ago
  CZ also came to the US willingly as opposed to Do Kwon who went on the run.
- floor2 2y ago
  > 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.
nikcub 2y ago
Related Roger Ver was also indicted and arrested today: https://www.justice.gov/opa/pr/early-bitcoin-investor-charged-tax-fraud https://www.justice.gov/opa/pr/early-bitcoin-investor-charge... The real crime there was selling 131k Bitcoin at ~$800 in order to back Bitcoin Cash. That's a ~$7B upside he missed because of block size politics.
- blackhaj7 2y ago
  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
- pcwalton 2y ago
  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.
  - nullc 2y ago
    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-the-mt-gox-money-went-new-details-in-the-btc-e-exchange-case/ 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.
deleted 2y ago
[deleted]
adultSwim 2y ago
I wasn't aware he was on trial. It's surprising how little attention his case has received.
- tim333 2y ago
  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.” and that's about it.

79 points by SirLJ 2y ago

> 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.

latchkey 2y ago
> Will CZ be the richest person ever sent to Federal prison? Maybe because no bank execs ever go to jail?
- gvhst 2y ago
  Even if bank execs went to jail CZ is still wealthier
- blackhawkC17 2y ago
  No U.S. bank executive is worth over $30 billion.
  - latchkey 2y ago
    select sum(us_bank_executives) where year >= 2007
    - blackhawkC17 2y ago
      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. 1- https://www.forbes.com/profile/andrew-beal/?sh=468364783067 https://www.forbes.com/profile/andrew-beal/?sh=468364783067
      - latchkey 2y ago
        Beal is a standout cause he actually predicted and prepared for the mess. https://www.forbes.com/2009/04/03/banking-andy-beal-business-wall-street-beal.html https://www.forbes.com/2009/04/03/banking-andy-beal-business... 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.
      - mtmail 2y ago
        Charles Schwab is also said to be worth $10 billion.
  - exe34 2y ago
    Not officially anyway, if their money is in tax havens.
segmondy 2y ago
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.
rchaud 2y ago
Forbes net worth estimates are about trustworthy as Tether's 'attestations'.
solumunus 2y ago
> 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...). Huh?!

gnabgib 2y ago

(edit) Seems the discussion is here vs https://news.ycombinator.com/item?id=40215052 https://news.ycombinator.com/item?id=40215052

deleted 2y ago
[deleted]

htrp 2y ago

>“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.

blackhawkC17 2y ago

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

throwup238 2y ago
> He'll spend just four months in a minimum security prison Probably on work release during the day. It's not even a time out. He's just going off to sleep at summer camp for a few months.
ai_what 2y ago
CZ also came to the US willingly as opposed to Do Kwon who went on the run.
floor2 2y ago
> 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.

nikcub 2y ago

Related Roger Ver was also indicted and arrested today: https://www.justice.gov/opa/pr/early-bitcoin-investor-charged-tax-fraud https://www.justice.gov/opa/pr/early-bitcoin-investor-charge... The real crime there was selling 131k Bitcoin at ~$800 in order to back Bitcoin Cash. That's a ~$7B upside he missed because of block size politics.

blackhaj7 2y ago
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
pcwalton 2y ago
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.
- nullc 2y ago
  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-the-mt-gox-money-went-new-details-in-the-btc-e-exchange-case/ 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.

deleted 2y ago

[deleted]

adultSwim 2y ago

I wasn't aware he was on trial. It's surprising how little attention his case has received.

tim333 2y ago
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.” and that's about it.