There was some kind of issue. Let me be clear here – when i say ‘the problem was fixed by now… On Tuesday afternoon in Seattle federal courthouse, former FTX CEO Sam Bankman-Fried (left) and Binance founder Changpeng Zhao were brought together. Both received four month prison sentences from Judge Mike Segar et al for their roles in their bitter archrivalry between one-time crypto titans FTX CEO Sam Bankman-Fried and Binance founder Changpeng Zhao’s arrest over their archrivalry between each other and each other’s companies, known as Binance founder Changpeng Zhao receiving jail time as part of that battle between former peers came to an end as Binance founder Changpeng Zhao was given his prison sentence as part of this week-long federal case involving several charges brought by Judge Ben Giretteet al for their respective conviction. Mike Segar | Reuters | Benjamin Girette | Bloomberg | Getty ImagesA federal court case on Tuesday saw Binance founder Changpeng Zhao given four month’s jail time from one time rival Sam Bankman Fried’s prosecution; Changpeng Zhao was found guilty on four counts charges related to allegations made of violations related to these matters brought before court for which Changpeng was found guilty on seven count guilty for violation charges related to previous crypto companies brought before court for violating federal charges filed against one time Crypto titan Sam Bankman Fried in addition FTX’s conviction on these counts against Bankman Fried; Bloomberg | Benjamin Girette | Bloomberg | Getty ImagesThe arch rivalry was officially brought before judge upon being found guilty for four months imprisonment charges brought by Washington judge on February 7th for violating its founder Changpeng being brought upheld against seven months for fraud related related matters on February 7 by judge Christopher Girette Girette was handed four month conviction by given prison time served against previous CEO Ben Girette’s previous activities against former Chief Benjamin Girette on February 7 2017 on charges brought by Banker against Binance founder Binance founder, with regards to which Binance founder Changpeng and Getty images via Getty images One month earlier in downtown Manhattan, Sam Bankman-Fried of FTX received a 25-year prison sentence for his crimes – seemingly an underwhelming and anticlimactic end of their protracted battle between Zhao and Bankman-Fried, two legendary adversaries as well as key members of the $2.2 trillion crypto sector. For years Binance’s Zhao preached about digital currencies’ powers while Bankman-Fried had preached against their use. Shortly after Bankman-Fried’s conviction, 47-year-old Zhao also pled guilty to criminal charges and agreed to step down as Binance CEO as part of a $4.3 billion settlement with the Department of Justice. Their situations differ significantly in many other ways – most prominently their disparate prison sentences of 296 months each. “CZ and SBF emerged as prominent figures within the cryptocurrency space but under distinct circumstances,” according to Braden Perry, former Senior Trial Lawyer with the Commodity Futures Trading Commission (CFTC). At first glance, Bankman-Fried’s prop seemed harmless enough, more as an attractive nod to an innocent spirit than as something which offered insight into his inner mind – until some who knew him began exploring its significance further. Two former colleagues and friends took turns at discussing its meaning with one another. One might assume SBF held on to Manfred close because “he doesn’t need to share him,” per Michael Lewis’ book that profiled Bankman-Fried (“Going Infinite”). But others considered having emotional attachments vitally important; one speculated: “Lewis states that Sam wasn’t affected by real animals at all and his decision was driven more by an expected value calculation rather than emotion. Bankman-Fried did have intimate issues. According to his family, friends, work colleagues, criminal defense attorneys and even Sam Bankman-Fried himself, part of what made Bankman-Fried difficult was his inability to feel much for anyone, including romantic love interests. Amr Alfiky | ReutersHis lawyers described him as often struggling socially; in high school Bankman-Fried realized he was anhedonic (unable to experience joy or pleasure). Sam describes that his negative emotions don’t differ much from those experienced by many other individuals – they neither appear more intense, nor less harmful than in many instances. “But Bankman-Fried does not experience pleasure, happiness or joy even when something very good occurs to him,” according to court filings in SBF’s criminal court docket. Lawyers representing him noted this wasn’t just some condition to “cure,” but was part of his identity and should remain “an integral component.” Lists included former C-suite, ex-roommates and best friends dating all the way back to high school, thus giving Manfred new significance and symbolism as it represented what appeared to be an isolated life of Bankman-Fried in which those closest to him ultimately sealed his fate behind bars despite parental defense efforts; CZ was different – many knew him personally stood in support. Zhao was indicted last December after his wife, current lover, two of his five children and numerous Binance employees submitted written pleas begging the judge for mercy during sentencing proceedings. Yi He is currently engaged to Changpeng Zhao (CZ). Yi is also one of the co-founders of Binance and serves as his romantic partner. According to Yi’s statement: “Even as mainstream media portray CZ as an antagonistic figure, millions of community users and ordinary people view him as one of their heroes of industry, since CZ has always insisted upon fair treatment.” Changpeng Zhao, former CEO of Binance, arrives at federal court for trial in Seattle on April 30, 2024. David Ryder/Bloomberg | Getty ImagesZhao’s wife Weiqing “Winnie” Yang described him as being self-made who has no debts owing to anyone and no liabilities attached to his name. Yang noted that Zhao has shown tremendous devotion in caring for herself and their mutual children. Rachel Zhao beseeched the judge to consider all aspects of her father’s character – not simply this incident – emphasizing how great of a father he truly was and expressing her belief that her dad “is one of a kind”. Differing approaches were taken in their presentation; Zhao had a military-style buzzcut while Bankman-Fried was recognized for his unruly mop of curls; CZ purchased clothing via Amazon but his look and demeanor were more subdued.” SBF was another individual who generally chose casual dress (usually consisting of loose T-shirts and cargo shorts), yet always appeared disheveled no matter the event or setting. At first he donned suits; by trial’s end however his curls had returned wilder. Zhao chose a fitted navy suit and light blue tie at his sentencing hearing, in stark contrast with Bankman-Fried’s beige jailhouse jumpsuit. But perhaps the main distinction between them lies in how each led his or her team. Zhao exuded an air of professionalism while keen on taking complete control over all facets of his sprawling enterprise. Bankman-Fried, who takes medication for neuro-developmental disorder attention deficit/hyperactivity disorder, sought similar levels of control; however, on the stand he acknowledged mistakes had been made due to feeling overwhelmed. Bankman-Fried’s psychiatrist made it crystal clear to the judge that without medication he would suffer an exacerbation of symptoms that would prevent him from providing assistance in his defense, and severely limit him as an effective witness in court proceedings. “Reuters reporting found that even as CZ’s crypto exchange expanded their hiring into traditional finance and regulatory talent pools, Zhao maintained tight control of his company.” Binance established over 70 entities, most of which are under Zhao’s direct control according to Reuters. Binance Founder and CEO Changpeng Zhao speaks at their Five Anniversary Event held in Paris France July 8 2022 Staff | Reuters Parchetae also presented testimony and exhibits supporting their narrative that Bankman-Fried was still orchestrating operations at Alameda Research without overt interference by authorities. Bankman-Fried’s decisions over his $32 billion crypto empire were absolutely power-based; any instances of wrongdoing related directly back to him. But unlike CZ, Bankman-Fried was responsible for an organization with disorganized and falsified bookkeeping that lead to its ultimate implosion and theft of billions from customers. Both men also sought to craft different public personas. While CZ favored privacy over openness in his decision making processes. Letters submitted by his romantic partners and children provided a glimpse into Zhao’s private dealings. But rather than turn to mainstream media for defense, CZ complied with federal authorities and kept quiet. Bankman-Fried went further still, going public about his crypto empire’s collapse through media interviews. Many of those statements were later used against him in October and November 2023 during his successful government trial. “SBF did not cooperate, violated his bail conditions, spoke often in favor of himself in media interviews and failed to exhibit genuine, heartfelt sorrow even at sentencing,” according to Yesha Yadav, law professor and associate dean at Vanderbilt University. “Part of CZ’s consideration when reaching his settlement agreement with Justice last November may have been to emphasize his conduct’s stark contrast to SBF,” noted Yadav. In Seattle, Zhao’s sentencing proceedings took place under more subdued conditions than Bankman-Fried’s had. “This proceeding had all the hallmarks of being prosecuted like an executive from Wall Street,” according to former state and federal prosecutors Mark Bini and Susan Bini, respectively. Zhao also expressed regret, taking responsibility for his crimes while telling Judge Xin Ji he regretted them and apologized profusely for them. At Bankman-Fried’s final appeal to Judge Lewis Kaplan, which did not contain an admission of guilt. When sentencing Bankman-Fried for 25 years in prison, Kaplan noted in his sentencing hearing that Bankman-Fried never expressed regret over committing such atrocious crimes, noting in 30 years on federal bench “never seen such performance like SBF trial testimony. If Bankman-Fried wasn’t outright lying during cross-examination by prosecutors then at best was “evasive,” Kaplan noted during his sentencing hearing. “Rather than accepting responsibility, Bankman-Fried chose instead to push his case to trial where he falsified evidence against himself,” former federal prosecutor Neama Rahmani noted to CNBC. The cases between Zhao and Bankman-Fried are quite distinct – Bankman-Fried’s empire may have been an illusion while Zhao used questionable business strategies that came back to haunt her down the line, while Bankman-Fried stole billions in customer money through fraudulent means at FTX. At Bankman-Fried’s criminal trial, both prosecution and defense agreed that $10 billion from customer funds that had been sitting on FTX’s crypto exchange had vanished without trace, with some going towards payments for real estate purchases, loan reversals, venture investments or political donations. Jurors were in agreement that Bankman-Fried was calling the shots. At issue here is intent: Did Bankman-Fried commit fraudulent behavior when allocating customer funds through FTX or simply make mistakes along the way? Jurors quickly decided that Zhao had committed fraud on an extensive scale; the government, on the other hand, held him and Binance accountable through separate allegations pertaining to international money laundering schemes that broke financial sanctions enactments and money laundering practices facilitated by them. Perry stated this connection between foreign crime – such as money laundering or breaching them – and Binance was key in its demise. Bankman-Fried’s customers’ funds weren’t stolen through criminal fraud; instead, three criminal charges against the exchange were filed, such as unlicensed money-transmitting business operation, violation of International Emergency Economic Powers Act regulations and conspiracy. The Department of Justice (DOJ) is recommending to the court imposing a $50 million fine against Zhao, according to Rahmani. Although Zhao turned a blind eye towards money laundering activities, he eventually admitted guilt for his actions by pleading guilty and accepting responsibility. Bankman-Fried used stolen client money for lavish personal expenditure. Rahmani noted, however, that Bankman-Fried received a much longer prison sentence due to her conviction of fraud; unlike Bankman-Fried however who wasn’t charged with such acts or others deserving a longer punishment such as Zhao hasn’t even been accused of any such offenses yet and hence can expect only lesser consequences than him for her offenses. “His letter to the judge does show regret for making unwise choices and indicates that Binance platform implemented stringent anti-money laundering controls under his direction,” Lovell commented. “SBF’s case involved allegations of fraud and misuse of customer funds, which tends to be seen as more directly deceptive and financially detrimental than compliance failures (like inadequate AML programs),” explained Perry. Compliance failures, while serious, might best be understood as oversight failure rather than intentional malfeasance according to Perry. “Fraudulent acts undermine trust and suggest intentional wrongdoing, leading to stronger public and judicial responses,” stated CZ. Money can make all the differenceUnlike SBF, CZ was spared having his wealth evaporate through bankruptcy of the crypto company he co-founded. As long as he cooperated with the government and plead guilty, his assets weren’t taken. Zhao will likely still remain one of crypto’s wealthiest individuals despite serving time behind bars; Binance’s controlling stake will ensure this remains so. Zhao reportedly owns an estimated 90% stake in Binance and much of his fortune derives from this ownership stake in the company. Binance was by far the world’s leading cryptocurrency exchange by trading volume last year – processing $18.1 trillion according to data provided by crypto market data firm CCData. Binance has seen its market share drop since Zhao left as CEO in November 2023; yet still remains the dominant cryptocurrency exchange — beating South Korean exchange Upbit, Dubai-based Bybit and US giant Coinbase by far. Furthermore, Yadav claims Binance remains lucrative despite facing extremely serious charges of money laundering and related misconduct. Binance, on the other hand, remains profitable and solvent, giving them access to funds they can draw on in order to settle fines imposed against them by regulators and authorities. Meanwhile, FTX continues its bankruptcy proceedings in Delaware. “FTX was revealed as being a criminal enterprise that is currently set for liquidation due to an assessment that its brand and use value are completely nonexistent,” according to Yadav. Additionally, Zhao entered a plea of guilt only on one count under Bank Secrecy Act (BSA), so as a first time offender reached a plea bargain agreement with federal authorities to step down as CEO without losing interest or having assets frozen against his name. “Typically, assets unrelated to criminal activities might remain undamaged by indictments,” according to Perry. He suggested managing his assets while in custody and on his behalf until release from incarceration is secured. “Sam Bankman-Fried was left penniless after his cryptocurrency empire imploded into bankruptcy in 2022. “CZ would still have access to his personal wealth by way of Binance shares and crypto holdings that contribute an undetermined but material amount towards his total net worth and wealth,” Joshua de Vos, research lead at CCData told CNBC via email. “Since there have been no misappropriation proceedings or bankruptcy proceedings affecting CZ, his wealth is unlikely to decrease as was seen with SBF,” de Vos reported. As for what’s next for FTX CEO John Ray III and his team of restructuring advisors are working tirelessly in an attempt to retrieve cash, luxury property and cryptocurrency owed back from customers as quickly as possible so as to restore wholeness for all involved customers. Bankman-Fried is appealing the verdict, while Zhao stated in court filings his ambition is bringing blockchain tech to biotech startups. Binance may still face trouble. SEC is conspicuously absent from Nigerian Exchange Group’s $4.3 billion settlement with U.S. Government while two employees continue to wait trial in Nigeria over allegations made against their exchange based on its conduct – CNBC’s Ryan Browne contributed this report.
