Posted on April 30, 2024 at 3:50 PM ET.
Changpeng Zhao, founder and former CEO of Binance He was sentenced on Tuesday to four months in prison for: his role in the crypto giant's anti-money laundering failures;
Zhao, known in the crypto industry as CZ, is one of the richest people not only in the industry but also in the world at large, with a net worth listed by Forbes magazine. Estimate For $33 billion. His sentence comes after a multi-year investigation into the largest cryptocurrency exchange, in which CZ pled guilty and the exchange was fined $4.3 billion, and CZ personally fined $50 million. .
The $4.3 billion is one of the largest fines ever imposed by the U.S. government and the second-largest fine for bank compliance violations. More than just the $8.9 billion levy against BNP Paribas. CZ's sentence is also unique in that it consists of an actual prison sentence.
Unchained has compiled other recent banking charges from across the crypto, trade deals, and even casino industries to provide comparisons.
1. Who: Arthur Hayes, Founder and CEO of BitMex
Fee: October 1, 2020: One count of violating the Bank Secrecy Act (BSA) and one count of conspiracy to violate the BSA.
Sentence: Hayes was sentenced to six months of house arrest and two years of probation. The other three BitMEX leaders were given probation terms ranging from one year to 30 months, with no other incarceration or incarceration.
One of the early crypto market heroes, Hayes founded the massive BitMEX exchange, which offers derivatives including futures trading and 100x leverage, which the US does not allow retail investors to access. . Like Mr. Zhao, Mr. Hayes sought to avoid operations in the United States that would not be well received by American authorities.
“Despite BitMEX repeatedly stating that it does not serve U.S. customers, including members of the press and people outside of BitMEX, both Mr. Hayes and Mr. Dero said that BitMEX BitMEX's alleged withdrawal from the U.S. market was a sham due to regulations introduced to prevent U.S. users from actually accessing and trading on BitMEX. It was an ineffective pretense to prevent the U.S. Department of Justice from disobeying the law,” the Justice Department said in a press release.
Hayes would ultimately plead guilty to one count of violating the BSA in the Southern District of New York.
Currently, Hayes runs the Maelstrom Fund and invests in new crypto projects.When the Justice Department's charges and huge fines against Binance and Zhao came out, Hayes I wrote it on my blog Skepticism: “Was Binance so big and evil that it committed more crimes than any bank in American history that has existed for centuries?”
2. Who: Chun “Michael” Gan and Ke “Eric” Tang, KuCoin founders
Fee: March 21, 2024: As individuals, Gan and Tan are each charged with one count of conspiracy to violate the BSA and one count of conspiracy to operate an unauthorized money transfer business. The Commodity Futures Trading Commission also filed a civil lawsuit at the same time.
Sentence: Unknown; Founders still on the run. Although the charges are similar to those in the BitMEX and Binance cases, Mr. Gan and Mr. Tan are less familiar public figures than Mr. Hayes and Mr. Zhao.
“Today’s indictment should send a clear message to other crypto exchanges: If they intend to serve U.S. customers, they must follow U.S. law, plain and simple,” said U.S. Attorney Damian. Williams said in a statement at the time of the indictment.
read more: KuCoin exchange reserves reduced by $273 million due to anti-money laundering violations
3. People: BNP Paribas
Fee: June 30, 2014: Massive Sanctions Violation
Sentence: Huge forfeitures of $8.9 billion and fines of $140 million were imposed, but those involved were not prosecuted individually.
French bank pleads guilty to operating in sanctioned jurisdictions, particularly Sudan and Cuba, And Iran. For over 10 years. This is the largest forfeiture ever ordered by the United States for a compliance crime of this type.
The lawsuit specifically highlights that BNP Paribas' involvement helped raise funds for the Sudanese government during its genocide in Darfur.
No individuals were named or charged by authorities at the time. Victims of the Darfur genocide filed a class action lawsuit in 2016, which was dismissed in 2018, but was brought back to court in April of this year.
4. Who: wells fargoand Carrie Tolstedformer head of retail banking at a bank
Fee: February 21, 2020: Prosecutors reach a settlement and agree not to file charges against Wells Fargo. They then charged Tolstedt with obstructing a bank examination.
Sentence: Wells Fargo paid a $3.7 billion fine. Tolstedt was sentenced to six months' home confinement and three years' probation, and was also fined $100,000.
Wells Fargo charged customers unfair fees and, most shockingly, opened millions of fake accounts across the United States in customers' names without them knowing they were being created over a 14-year period. He admitted to several illegal acts, including:
Although the case was a completely different type of crime than the other players in this lineup, it was a rare example of a traditional big bank figure facing separate charges. However, Tolstedt's sentence was deemed not overwhelming given the prosecution's goal of sending a message.
The government's case for a prison sentence for Mr. Tolstedt states, “The sentence must be a sufficient deterrent. For corporate wrongdoers, maintaining the lucrative position of criminal activity is not worth the risk.” We must send a clear message that there is no such thing.”
5. Person: Danske Bank
Fee: December 13, 2022: Bank Fraud Conspiracy
Sentence: $2 billion fine.No individual charges
Ministry of Justice case The matchup with Danske Bank is probably most similar to the matchup with Binance attacking a major player in tradfi. U.S. authorities allege that the Danish bank lied to a U.S. bank to gain access to the U.S. financial system on behalf of an Estonian affiliate. Additionally, the Justice Department claimed that this was specifically aimed at linking Russian funds to U.S. banks.
“Dansk Bank, Denmark's largest bank, deliberately ignored U.S. laws that it knew well, facilitated the laundering of criminal proceeds and suspicious proceeds through the United States, and compromised U.S. financial networks. But all of this was done in the name of bottom line,” U.S. Attorney Damian Williams said in a statement with the charges.
6. People: MGM Grand and former president Scott Civella
Fee: January 25, 2024: Failed to report suspicious transactions as required by BSA.
Sentence: Civella is scheduled to be sentenced next week. Prosecutors recommended “12 months probation and a $9,500 fine,” which sets the cap for what awaits him. They also imposed fines on MGM Grand and Cosmopolitan totaling $7.5 million.
According to the government's statement of facts, Civella maintained a fairly cozy relationship with a high roller named Wayne Nix, who made a living as an illegal bookmaker. However, Civella and the MGM Grand marketing team persistently persuaded the Knicks with a free offer to spend a weekend gambling at their casino in exchange for filing a mandatory suspicious activity report regarding their dealings with the Knicks.
