BitMEX founder Arthur Hayes has argued that Binance and its former CEO Changpeng "CZ" Zhao were singled out for “absurd” punishment at the hands of the U.S. legal system.
In a lengthy blog post, Hayes claimed that, “the treatment of CZ and Binance is absurd,” arguing that it “highlights the arbitrary nature of punishment at the hands of the state.”
The $4.3 billion fine levied against the exchange was, Hayes said, disproportionately harsh compared to the treatment of “Too Big to Fail bank CEOs” responsible for the 2007-2008 financial crisis. “They got a free pass because to prosecute them would threaten the banking system,” he added.
Hayes further suggested that CZ’s meteoric ascent from a “nobody” to “one of the richest humans on earth in less than a decade,” at the head of a crypto exchange, represented a challenge to the “financial and political establishment,” through disintermediating institutions and handing control over to individuals who are not “members of their class.”
gm: Arthur Hayes Says Crypto Failures Are A Sign of The System Cleansing Itself
Arthur Hayes says the speed at which projects like Terra grow and implode is a feature of the crypto industry, not a bug. He founded crypto exchange Bitmex in 2014 and then became the original crypto bad boy. In 2021 the DOJ charged him in with violating the U.S. Bank Secrecy Act for not implementing an anti-money laundering program at Bitmex. He plead guilty and was sentenced to two years probation and six months of home detention. In fact, he was still sporting an ankle bracelet on a recent cover of New York Magazine. Now he's living in Singapore, offering up his views on the crypto industry with long form, meme-filled essays, and still thinks the crypto industry will save investors from what he calls a broken banking system. "I don't care if you're capitalist or you're a communist. Everybody put on a lot of debt. We've passed the point where that debt is becoming useful," he said. "And therefore everyone is going to take an L unless they get some crypto or some gold—some hard asset that's outside of the traditional banking system."
Zhao stepped down as CEO of Binance earlier this month after pleading guilty to anti-money laundering violations, with the exchange paying $4.3 billion to settle AML and sanctions violations and agreeing to exit the U.S. market entirely.
As part of a personal plea deal, Zhao put up $15 million and had guarantors offer $5 million in collateral for a $175 million bond. He faces up to 10 years in prison and must pay a $50 million fine. Yesterday, a judge ruled that Zhao must remain in the U.S. pending his sentencing in February 2024.
Former Binance CEO CZ Can’t Leave US Until Court Decides If He’s a Flight Risk
Changpeng "CZ" Zhao, former CEO of crypto exchange Binance, must stay in the United States for now, a federal judge ruled Monday. This comes after Zhao pleaded guilty last week to violating the Bank Secrecy Act. The decision puts on hold an earlier ruling that would have allowed Zhao to return to his family in the United Arab Emirates while awaiting sentencing in February 2024. Prosecutors argued Zhao poses a flight risk, given his wealth and the lack of an extradition treaty with the UAE. Last...
According to the U.S. Department of Justice, Zhao “turned a blind eye to its legal obligations in the pursuit of profit," serving U.S. users without proper controls and enabling funds tied to crimes including hacking and terrorism to flow through the exchange. Binance also failed to stop over $898 million in illegal trades between U.S. users and residents in sanctioned countries including Iran, the DOJ claimed.
Hayes stepped down as CEO of BitMEX in 2020 after the CFTC charged the exchange with money laundering and operating illegally in the U.S., and the U.S. Attorney for the District of New York charged Hayes with violating the Bank Secrecy Act.
In February 2022 Hayes pled guilty to violating the Bank Secrecy Act, paying a $10 million fine. Hayes was also sentenced to six months of house arrest and two years’ probation.
Edited by Stacy Elliott.
