Ki Young Ju, the CEO of blockchain analytics firm CryptoQuant, has expressed his support for former Binance CEO Changpeng Zhao (CZ) as his four-month prison sentence nears its conclusion.

Zhao began serving his sentence in June 2024 after admitting to breaches of the US Bank Secrecy Act (BSA).

Ki Young Ju’s Statement

His guilty plea involved not preventing money laundering on Binance, resulting in a $4.3 billion penalty for the company and a $50 million fine for Zhao himself. His imprisonment, which started in June 2024, will end on September 29.

In a recent statement posted on X, the CryptoQuant CEO acknowledged the Binance executive’s mistakes while also emphasizing his contributions. “Don’t underestimate CZ. He deserves respect,”  he wrote, elaborating on the broader societal perspective.

The statement noted that when an industry’s intrinsic value falls short of the capital it has absorbed, society tends to view this as a “sin.” In such scenarios, the most influential figures are often held responsible for the industry’s shortcomings.

He further explained that the crypto sector, like other young and immature ones, has faced its share of “growing pains,” including rampant crime like hacks and frauds, which have hurt its growth. In his view, Zhao has become a scapegoat for some of the industry’s failings, but this should not overshadow his role in its development.

“While he has certainly made mistakes, his detention also carries a vicarious element, representing the industry’s growing pains.” He concluded by acknowledging that without Binance, the crypto space would not have attracted the global liquidity it benefits from today.

Community Backlash

Meanwhile, there has been some backlash from the community following the statement. BlockTower Capital’s Ari Paul alleged that CZ  committed all the same crimes as Sam Bankman-Fried and that he was only spared a harsher sentence due to fears of his ability to bribe foreign governments and the value of the information he could provide to authorities.

He also claimed that CZ’s actions had “ruined a lot of lives,” leading to the “vanishing” of several Binance executives, and had caused significant harm to the industry as a whole.

However, Ju has countered these accusations, stating that the exchange never used customer funds and that on-chain data shows the differences in wallet management between Binance and FTX. He also pointed out that the exchange’s CEO was not charged with using customer funds but rather with abetting money laundering.

“If CZ were truly the criminal you’re suggesting, the authorities wouldn’t have released him, even if a deal had been offered, as you mentioned.”

Ju also argues that the suspicion surrounding Binance is similar to the FUD (fear, uncertainty, and doubt) surrounding Tether, as there is no conclusive evidence to support the accusations.

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Former Binance CEO Changpeng ‘CZ’ Zhao has been transferred from FCI Lompoc II to the RRM Long Beach halfway house in California, sparking confusion among X users who mistakenly believed he had been released.

Despite the change in his location, CZ remains incarcerated.

The RRM Long Beach facility, categorized as a ‘residential reentry management (RRM) field office,’ is designed to assist inmates nearing their release but does not equate to a full release. InmateAID – which is a Federal inmate communications provider – describes this facility as one with voluntary compliance requirements rather than a high-security environment, though strict house rules must be followed.

The misinterpretation of CZ’s transfer has been compounded by a previous mix-up about his release date. Although his sentencing was set for April 30, CZ’s imprisonment began later in May, resulting in a scheduled release on September 29.

CZ resigned as Binance CEO in November 2023 and agreed to pay a $50 million fine after pleading guilty to US federal charges, including violating the Bank Secrecy Act.

Binance also pled guilty, paying $4.3 billion in fines. Zhao pled guilty to violating the American Bank Secrecy Act by prioritizing Binance’s growth over compliance.

As part of a plea deal, Binance acknowledged operating an unlicensed money-transmitting business and violating the International Emergency Economic Powers Act. The former exec was sentenced to four months in prison in April 2024, with prosecutors having sought three years.

As he serves out the remaining 37 days of his sentence, CZ is also facing new legal challenges.

A recent lawsuit, filed on August 16, accuses CZ and Binance of inadequate anti-money laundering (AML) and know-your-customer (KYC) protocols, which allegedly allowed criminals to launder stolen funds through the platform. This additional legal battle adds to the complications surrounding CZ’s current legal situation.

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Changpeng Zhao (aka “CZ”) – the founder and former CEO of crypto exchange giant Binance – has been sentenced to 4 months in prison after a hearing in a Seattle courthouse on Tuesday.

• The sentencing follows CZ’s guilty plea to running afoul of know-your-customer and anti-money laundering requirements at his exchange in November.
• During the hearing, Judge Richard Jones acknowledged tht CZ had “accepted responsibility” for his actions, and that his actions at Binance were of a “mitigating nature.”
• “There’s no evidence that the defendant was ever informed [of illegal activity at Binance]” the judge said, as reported by journalist Nikhilesh De.
• Jones was immediately skeptical of the Department of Justice (DOJ), for arguing that CZ should be sentenced to three years – twice the recommended sentencing guideline for similar crimes.
• The DOJ argued that the punishment should fit the magnitude of CZ’s crime, claiming the Bank Secrecy Act would “for intents and purposes be a dead letter,” if CZ did not receive meaningful time in prison.
• By contrast, CZ’s defense argued for no prison time at all, citing the United States’ previous case against BitMEX co-founder Arthur Hayes, who instead received two months probation.
• Binance has already agreed to pay a $4 billion fine, while CZ paid a $50 million fine as part of a plea deal last year. Some estimates suggest that the crypto mogul still has $43 billion to his name.
• “I recognize the importance of having a robust KYC/[anti-money-laundering] program,” said CZ in court on Tuesday. “That is why I directed Binance to cooperate with the U.S.’s investigation.”

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Following the guilty plea of Changpeng Zhao (CZ), founder and former CEO of crypto exchange Binance, in November 2023, several American states have asked the local arm of the trading platform to refrain from servicing their residents.

The Wall Street Journal reported that authorities in Florida and Alaska recently instructed Binance.US to cease its services in the regions.

Florida and Alaska Restrain Binance.US

Recall that the Department of Justice (DOJ) announced a $4.3 billion settlement with Binance late last year, but the exchange refrained from pleading guilty to willfully floundering the Bank Secrecy Act, among other charges. At the same time, CZ pleaded guilty to failing to implement a strong anti-money laundering (AML) program on the platform, accepting to pay a $50 million fine and resign from the CEO position.

Besides stepping down as Binance’s CEO, CZ also exited his role as chairman of Binance.US’ board of directors and transferred his voting rights to Norman Reed, the firm’s chief executive. Following the changes, CZ’s interest in the exchange’s American arm became purely economic as the company became independent of its global business.

Despite all said and done, regulators in Florida and Alaska said CZ’s guilty plea has made him unsuitable to control Binance.US as he still holds approximately 80% of the firm’s shares.

Within a week after the guilty pleas, the Florida Office of Financial Regulation issued an emergency suspension order against Binance.US’ money services business license, stating that the continued operation of the platform constituted “an immediate serious danger to the public health, safety, and welfare.”

CZ to Be Sentenced Next Month

Furthermore, the Alaska Division of Banking and Securities denied the renewal of Binance.US’ money transmitter license earlier this month because the exchange’s ownership structure did not meet the requirements for renewal.

It is worth mentioning that regulators in Arkansas, Illinois, and South Dakota reached an agreement with Binance.US in December concerning the firm’s continued operation in the states. The settlement requires the exchange to secure a depository account at a federally insured banking institution and make the transfer of CZ’s voting rights irrevocable no later than June 30, 2024.

Meanwhile, CZ has been confined to the U.S. until his sentencing next month despite being released on a $175 million personal recognizance bond after his guilty plea and offering his $4.5 billion equity in Binance as collateral.

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Arthur Hayes, the founder of the BitMEX crypto exchange network, issued a statement expressing his perspective on the unfair treatment of Changpeng Zhao (CZ), the co-founder and former CEO of Binance, by American authorities.

Hayes criticized the treatment, deeming it absurd and inconsistent, emphasizing that it only highlights the arbitrary nature of punishment.

BitMEX Founder Slams CZ Treatment

In his statement, the BitMEX founder opens with a playful reference to a Biblical verse, followed by a straightforward statement: “Changpeng Zhao (CZ), the former CEO of Binance, is a sinner, but not for the reason you might expect, considering recent events.”

Hayes proceeds to recount the story of CZ, a Canadian of Chinese descent, who swiftly ascended to billionaire status by providing crypto trading services through the renowned exchange Binance.

Hayes highlights that the exchange was widely regarded as a symbol of financial freedom and an effective means to speculate on a new political, economic, and traditional system.

However, as Hayes points out, the issue lies in the fact that these platforms driving the financial revolution are not backed by political or financial establishments but are run by ordinary individuals.

Furthermore, Hayes argues that these individuals enable others to own a stake in the Industrial Revolution within 10 minutes, using either mobile trading apps or desktop platforms – an unprecedented phenomenon.

Emphasizing the severe treatment experienced by both CZ and Binance, Hayes draws attention to the substantial $4.3 billion fine imposed on the exchange, marking it as the most significant corporate penalty in the history of Pax Americana.

Hayes observes that the treatment of this financial giant differs significantly from the consequences faced by traditional institutions such as Goldman Sachs and HSBC in the aftermath of scandals.

Those who oversee such expansive platforms often leverage state and legal mechanisms to diminish the influence of institutions governing the “global financial and political system of Pax Americana.”

Testament of Blockchain’s Transformative Power

The BitMEX founder asserts that the recent unjust treatment underscores the transformative potential of the blockchain ecosystem.

He emphasizes that the blockchain space is establishing a parallel to the financial, political, and economic systems. Through voluntary legal participation instead of coercive measures, this new system has the potential to enable individuals to amass substantial wealth within a decade.

Hayes highlights that CZ’s and Binance’s treatment should serve as compelling evidence for the necessity of long-term investments in Bitcoin and other cryptocurrencies. Given the ongoing fluctuations, Hayes urges crypto holders to store their assets in wallets controlled by themselves, ensuring financial independence.

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