Arthur Hayes, the founder of BitMEX crypto exchange, pointed out that the US legal system had singled out the Binance crypto exchange and its founder, Changpeng Zhao, for ‘absurd’ punishment.
Hayes published a lengthy blog post in which he claimed that the treatment of CZ and Binance was weird and it highlighted the punishment’s arbitrary nature at the hands of the state.
The punishment
According to Hayes, the fine worth $4.3 billion that has been levied on the crypto exchange is extremely disproportionate as compared to the bank CEOs who were responsible for the financial crisis in 2007-2008.
He added that these CEOs had been given a free pass because prosecuting them would have threatened the banking system.
He further suggested that the meteoric ascent of the former CEO of Binance from a ‘nobody’ to one of the world’s richest people was a challenge to the political and financial establishment.
This is because CZ had managed to achieve this as the head of a crypto exchange and this disintermediated institutions and gave control to individuals who do not belong to the same class.
Zhao’s situation
Earlier this month, Zhao stepped down from his position of CEO of Binance after he pled guilty to charges of anti-money laundering violations.
His crypto exchange also agreed to pay a fine of $4.3 billion for settling sanctions and AML violations and to exit the US market completely.
As for his personal plea deal, Zhao had guarantors offer collateral worth $5 million for a bond of $175 million and put up $15 million himself.
He has to pay a fine of $50 million and could be facing a prison sentence of 10 years. A judge ruled that Zhao has to remain in the United States until he is sentenced in February next year.
Other details
The US Department of Justice (DOJ) said that Zhao had been focused on pursuing profits and had chosen to ignore his legal obligations while serving US clients.
There had been no proper controls in place and this allowed funds related to crimes, including terrorism and hacking, to move through the exchange.
Binance had also not been able to stop illegal trades worth $898 million between users in the US and residents of sanctioned countries, such as Iran.
In 2020, Hayes himself stepped down as CEO of BitMEX after his exchange had been charged by the CFTC for illegally operating in the United States and money laundering.
Hayes had also been charged by the US Attorney for the District of New York for violation of the Bank Secrecy Act.
Last year in February, Hayes had pled guilty to violation of the Bank Secrecy Act and had also paid a fine of $10 million.
Hayes had also been sentenced to probation of two years and house arrest of six months. CZ’s charges are more serious and could lead to a much stricter sentence.
He is not permitted to leave the US because he could be at flight risk.