Hayes Criticizes US Agencies for Treatment of Binance CZ

Arthur Hayes, the founder of BitMEX, contends that the U.S. legal system subjected Binance and its former CEO Changpeng “CZ” Zhao to a punishment he calls “absurd.” In a lengthy blog post, Hayes asserts that the treatment of CZ and Binance underscores the arbitrary nature of state-imposed penalties.

Hayes argued that the exchange’s $4.3 billion fine was excessively severe when juxtaposed with the lenient treatment afforded to “Too Big to Fail bank CEOs” accountable for the 2007-2008 financial crisis. He contended that these executives received a free pass, as prosecuting them was deemed a threat to the stability of the banking system.

Hayes went on to say that by dismantling institutions and giving control to people who are not “members of their class,” CZ’s explosive rise from a “nobody” to “one of the richest humans on earth in less than a decade” at the head of a cryptocurrency exchange represented a challenge to the “financial and political establishment.”

After admitting guilt to anti-money laundering charges, Zhao resigned as CEO of Binance earlier this month. The exchange also agreed to quit the U.S. market altogether and paid $4.3 billion to satisfy AML and sanctions violations.

Binance Founder CZ Legal Bind: $175 Million Bond, $50 Million Fine, & A 10-Year Prison Risk

Zhao put up $15 million and had guarantors pay $5 million in security for a $175 million bond as part of a personal plea agreement. He must pay a $50 million fine and risk serving up to 10 years in prison. According to a judge’s decision yesterday, Zhao must stay in the United States until his sentencing in February 2024.

The U.S. Department of Justice claims that Zhao “turned a blind eye to its legal obligations in the pursuit of profit,” providing improper controls for U.S. users and permitting money connected to crimes like terrorism and hacking to pass through the exchange.

Furthermore, the DOJ asserted that Binance was unable to halt illicit transactions totaling more than $898 million between American users and citizens of sanctioned nations, such as Iran.

On the other hand, Coinbase CEO Brian Armstrong said it’s time to turn the page after the Binance settlement and look ahead for clear regulations.

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