PUNCH
GODFREY GEORGE writes about why Nigeria, the United States, and other countries are fighting these crypto kings, some of whom have been arrested, jailed, or made to pay compensation for their activities bordering on fraud, regulatory issues, and taxes
A few days ago, news flooded the media of how a court in the United States sentenced the founder of Binance (one of the world’s largest crypto firms), Changpeng Zhao, to four months in prison after he pleaded guilty to violating the US anti-money laundering requirements.
According to several sources, this was a ‘lighter punishment’ than requested by prosecutors, who hoped to send a message about crime in the industry.
“You had a responsibility to comply with United States regulations. Not some, but all. You failed at that opportunity,” US District Judge Richard A. Jones was quoted as saying.
Zhao had, in the course of the case, pleaded guilty last year to a money laundering violation, acknowledging that his company allowed terrorist groups and other criminals to have access to its platform.
Defence lawyers asked for probation without any prison time, while prosecutors requested a three-year sentence, calling it an “unprecedented” crime.
But Judge Jones, who oversaw the case in the US District Court in Seattle, said that Zhao had taken responsibility for his offences and was unlikely to break the law again.
“Your conduct does not warrant a 36-month sentence,” Judge Jones said.
He called Mr Zhao “a dedicated family man and a giving person” and praised his “staggering accomplishment” in building Binance.
Dressed in a black suit and light blue tie, Zhao, 47, did not seem to visibly react as the sentence was announced. But he nodded vigorously during Judge Jones’s statement and touched his hand to his heart, the New York Times reported.
“I failed here. I deeply regret my failure, and I’m sorry,” the Binance chief said.
It was not immediately clear when Mr Zhao would report to prison. His lawyers asked the judge to expedite the process and requested that he serve his sentence at SeaTac, a federal prison in the Seattle area.
The sentencing was the second high-profile penalty this year in the Justice Department’s campaign to root out criminal behaviour in the crypto industry.
In March, the founder of the now-collapsed FTX exchange and Zhao’s onetime business rival, Sam Bankman-Fried, was sentenced to 25 years in prison for fraud.
Some analysts with the NYT said Zhao’s sentence was an extraordinary contrast to Bankman-Fried’s penalty and the consequences that would ‘likely await other crypto executives who have been accused of crimes’.
Another high-profile crypto founder, Do Kwon, was charged with fraud last year and sent to jail in Montenegro, as he awaits extradition to either the United States or his home country, South Korea.
This is as Alex Mashinsky, the Chief Executive Officer of the failed crypto bank, Celsius, is battling charges that may carry decades of prison time.
Zhao’s four-month sentence has been criticised as “an egregious miscarriage of justice” that “sends exactly the wrong message to criminals worldwide,” according to Dennis Kelleher, the President of Better Markets, a nonprofit advocating stringent financial regulation.
Representatives for Zhao’s legal team and the Justice Department have chosen not to comment. In a recent letter to Congress, Carlos Uriarte, an assistant attorney general, urged lawmakers to consider imposing harsher penalties for violations of the Bank Secrecy Act, the law Zhao admitted to breaking.
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