Changpeng Zhao, also known as CZ, the co-founder and former CEO of Binance, which is recognized as the largest cryptocurrency exchange globally based on trading volume, has expressed regret over the lack of compliance controls during Binance's formative years. However, he stated that the company "implemented the most stringent anti-money laundering controls of any non-U.S. exchange" in 2022. This statement was part of a letter filed in court on April 23 ahead of his sentencing for anti-money laundering violations at Binance set for April 30.
"There is no excuse for my failure to establish the necessary compliance controls at Binance," said Changpeng Zhao (CZ). "I wish I could change that part of Binance's story. But under my direction, Binance has now implemented the most stringent anti-money laundering controls of any non-U.S. exchange, and those controls have been in place since 2022."
According to the court filing, CZ addressed his letter to Judge Richard Jones of the Western District of Washington. In it, he apologized for his "poor decisions" and claimed "full responsibility" for his actions. Reflecting on past decisions, Zhao said he should have prioritized implementing more stringent compliance controls at Binance from its inception. He extended his apologies to those he had disappointed including family members, friends, employees, and the broader crypto community. Prior to founding Binance, Zhao recounted several unsuccessful business ventures in the tech sector where he "always returned investor money and made everyone whole." Looking ahead, Zhao expressed interest in focusing on funding small research labs in the biotech sector that are less profit-driven than large pharmaceutical companies with an ultimate goal of curing diseases and expanding medical access worldwide. Additionally, he voiced a desire to continue focusing on youth education and support - a priority during his tenure at Binance. He concluded by assuring that this would be his only encounter with the criminal justice system and pledged to live a life that would make everyone proud.
Zhao stepped down from his role as CEO at Binance in November when a resolution was reached with the U.S. government over historical compliance issues, according to a press release from the U.S. Department of Justice (DOJ). As part of this resolution, Binance agreed to pay $4.3 billion in penalties and will permit a third-party monitor to access its transactions and accounts. Additionally, Zhao agreed to plead guilty to failing to maintain an effective anti-money laundering program as part of the settlement.
The DOJ is seeking a three-year prison sentence for Zhao, according to another court filing. The sentencing is scheduled for April 30.
A court filing reveals that Zhao received 161 letters of support from various quarters including family members, friends, business and community leaders, colleagues, employees, industry professionals, and Binance users. One such letter was from Jessica Zhao, CZ's sister and a former managing director at Morgan Stanley. She praised his "dedication and passion" throughout his early life and career and stated that his goal in all business ventures was to use technology to create the best value for clients. Jessica recalled the collapse of the crypto exchange FTX in 2022 which led to a large number of withdrawals from Binance. Despite this challenge, she said CZ was confident that all Binance users could withdraw their funds in full. As she put it: "Sure enough, Binance handled the withdrawals without a glitch both financially and technically." She affirmed that Zhao had never harmed anyone and remained true to his values of doing good for the community.
According to Investopedia, CZ was born in China but moved to Canada at a young age after his father was exiled due to his intellectual views. Before launching Binance in 2017, he held various roles in the financial sector. The exchange now boasts a daily trading volume of $76 billion with 90 million users globally.
