Changpeng “CZ” Zhao had an impressive array of family members, friends, crypto execs, and Binance employees write to the presiding judge on his behalf.
Federal prosecutors have asked a judge to impose a three-year prison term on Zhao.
(Web Summit)
Posted April 25, 2024 at 2:13 pm EST.
With more than 160 letters of support in advance of Changpeng “CZ” Zhao’s sentencing, it appears that the co-founder and onetime chief of Binance has outplayed his old rival Sam Bankman-Fried once again.
As the disgraced FTX founder Bankman-Fried awaited sentencing from a high-security Brooklyn prison, about two dozen supporters, many of whom were family members and friends, wrote letters to the court pleading for leniency. Those well-wishers were vastly outnumbered, however, by the scores of victims who submitted letters to the court, out for blood.
Once the high-flying de facto face of crypto, brushing shoulders with high-ranking U.S. politicians and Wall Street titans, Bankman-Fried became a de facto pariah. Former friends, fans, and business partners either receded into the woodwork or condemned him publicly.
Read more: Binance’s CZ Apologizes for ‘Poor Decisions’ as DOJ Pushes for 3 Year Prison Term
By contrast, Bankman-Fried’s one-time No. 1 competitor, Zhao, has been greeted with a starkly dissimilar reception as the Binance founder awaits his upcoming sentencing for federal money laundering on April 30. More than 160 letters of support were sent to the Seattle court overseeing Zhao’s case. There didn’t appear to be any letters lobbying for a longer sentence, although money laundering charges are obviously quite different than being accused of defrauding customers and investors of billions of dollars.
Many of those letters supporting Zhao referenced his cooperation with investigators and acknowledgement of guilt, as well as his drive to push crypto forward. One friend from Zhao’s college years wrote that he “truly believed in the utopian vision of decentralization that would allow the democratization of financial services,” adding that the “technology would help the underprivileged and the oppressed.”
Read more: Binance Cofounder Changpeng Zhao Teases New Educational Project Ahead of Sentencing
Most, including some from quite a few Binance employees, urged the judge to impose no jail time. They cited his cooperation with investigators, his admission of guilt, and his willingness to give up the reins at the exchange he built into the world’s largest by trading volume.
Prosecutors with the Department of Justice in December 2023 accepted Zhao’s guilty plea on federal money laundering charges. Under a joint plea deal, Binance agreed to pay a monumental $4.3 billion settlement to resolve separate allegations against the crypto exchange. And Zhao — who had been released in November on a personal bond of $175 million — consented to a $50 million personal penalty.
Read more: Binance Converts Secure Asset Fund (SAFU) for Users to USDC
In addition to friends, family members, and former employees, Zhao’s allies who wrote letters of support included Samson Mow of bitcoin-focused firm JAN3; Malcolm Shu of investment firm No Limit Holdings; Phillip Shoemaker, of decentralized verification service Identity.com; Wang Jiatian of indexing protocol Hyper Oracle; Henry Liu of exchange BTSE; and others.
By contrast, the letters of support for Bankman-Fried were mostly from family and personal friends, and emphasized challenges stemming from his autism and purported obsession with morality.
And the letters from Bankman-Fried’s victims were unsparing.
In one, an FTX user, who said they were 24 at the time of FTX’s collapse, wrote that they lost their entire life savings, more than $20,000, due to the “actions of Sam Bankman-Fried.”
“I have experienced feelings of betrayal and disillusionment, as I trusted FTX.com to safeguard my savings,” they wrote. “The experience has eroded my trust in financial institutions and has made me more cautious and skeptical in my financial decisions.”
The Pair’s History as Rivals
Zhao outfoxed Bankman-Fried in the fourth quarter of 2022, when he tweeted that Binance would imminently liquidate a large amount of FTX’s native FTT token, citing “recent revelations that have came to light.” This came after Zhao at one point offered to bail out FTX.
Zhao’s move sparked an FTT fire sale, prompting an FTX liquidity crisis. It followed CoinDesk reporting detailing improper intermingling between FTX and Bankman-Fried’s purportedly separate trading firm, Alameda Research. Binance had $2.1 billion in cash and FTT on hand from its earlier FTX equity exit.
https://twitter.com/cz_binance/status/1589283421704290306?lang=en
A few days after Zhao’s tweet, shortly before being forced to declare bankruptcy, Bankman-Fried tweeted that “at some point, I might have more to say about a particular sparring partner, so to speak…for now, all I’ll say is “well played; you won.”
Prosecutors are seeking a three-year prison term for Zhao, double the previous maximum expectation of his attorneys of 18 months. At the end of March, Bankman-Fried was sentenced to 25 years in prison.
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