Benjamin Naftalis, a legal representative for former Binance CEO Changpeng Zhao (CZ), stated that there is no precedent of a defendant in a case related to the Bank Secrecy Act (BSA) that is "remotely similar" being sentenced to prison. This statement was shared by Naftalis in a court filing ahead of CZ's sentencing on April 30.
"Mr. Zhao has paid massive fines," said Naftalis. "He directed the Company to plead guilty before this Court and to resolve related civil charges with three federal agencies. These factors strongly favor lenience. No defendant in a remotely similar BSA case has ever been sentenced to incarceration."
The sentence came after CZ pleaded guilty to violating the BSA by failing to implement adequate anti-money laundering controls at Binance. According to The Verge, he also paid a $50 million fine for this violation. The federal sentencing guidelines for such an offense stipulate 18 months in prison, but Judge Richard Jones indicated that CZ had taken responsibility for his actions and did not seem likely to reoffend. Jones further noted that CZ has no prior criminal offenses and has taken "extraordinary steps and significant steps" in cooperating with law enforcement.
Austin Campbell, an adjunct professor at Columbia Business School who previously worked at JP Morgan Chase and Citi, questioned whether executives of traditional banks who committed similar offenses have been sentenced to time in prison. "Who in senior management at any of Citi, DB, HSBC, etc. are in jail for their (arguably larger) money laundering antics?" asked Campbell.
According to a report by iNews, no HSBC executive was imprisoned when the company admitted to allowing the Mexican Sinaloa cartel, a global leader in drug trafficking, to use the bank for laundering billions of dollars from drug proceeds. HSBC was fined $1.9 billion and agreed to reform its anti-money laundering controls. However, UK authorities fined the bank another 63.9 million pounds in 2021 due to "serious weaknesses" in its anti-money laundering procedures.
A "violation tracker" maintained by Good Jobs First reports that major traditional banks, such as JP Morgan Chase and Citigroup, have been penalized a total of $287 billion for financial violations since 2000. The top offender is Bank of America, which has been penalized $41.3 billion for 155 violations, according to the tracker. The violations recorded by the tracker include economic sanction violations and anti-money laundering deficiencies.
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. He held various roles in the financial sector before launching Binance in 2017. The exchange now boasts a daily trading volume of $76 billion, with 90 million users worldwide.
