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Sam Bankman-Fried is sentenced to prison term


The dark side of crypto

Cryptocurrency is seen as the next phase in financial currency, but as of late, society is seeing the dark side of this system. Over the last few years, there have been countless scandals, scams, and crimes committed by companies, firms, crypto groups, and individuals, all trying to find a way to make a profit on the market in multiple ways. Some were caught and reprimanded, while others got away with finessing the system. Changpeng Zhao, the founder and CEO of Binance, was not one of those lucky people. 

Binance was founded in 2017 by Zhao and served as one of the biggest cryptocurrency exchange platforms, housing more than 350,000 coins being exchanged daily. Until recently, Binance boasted nearly 60% of the market share for crypto spot trading. Even as that share has waned closer to 40% since US regulators amped up pressure on the company in June, no other exchange has come close to those holdings. Regulators began turning the heat up on many crypto companies after Sam Bankman-Fried, the founder of cryptocurrency exchange FTX, was convicted of committing fraud through a scheme that cheated customers and investors of at least $10 billion.

During the trial of Fried and FTX, it was revealed that Binance was in the process of buying FTX but backed out after their scandal was exposed. After a few years of conducting an investigation, the US Department of Justice charged Zhao and Binance with allowing bad actors on the platform, enabling transactions linked to child sex abuse, narcotics, and terrorist financing.

Binance did not have protocols to flag or report transactions for money laundering risks, according to the Justice Department, and employees were well aware that such an oversight would invite criminals to the platform. As one compliance staffer wrote, according to court documents:  “We need a banner ‘is washing drug money too hard these days. Come  - come to Binance we got cake for you.’”

Zhao quickly took responsibility for the crimes Binance was charged with. “As a shareholder and former CEO with historical knowledge of our company, I will remain available to the team to consult as needed,” Zhao said. He also said he might privately mentor upcoming entrepreneurs in the future but didn’t see himself working as a startup CEO again. 

On Nov. 22, Zhoa was charged with multiple financial crimes and agreed to pay about $4.3 billion, the Justice Department announced. Binance also pleaded guilty to failing to register as a money-transmitting business and violating the International Emergency Economic Powers Act. Zhao, who also goes by “CZ,” resigned as CEO.

“Binance prioritized its profits over the safety of the American people,” said Attorney General Merrick Garland in a recent press conference announcing the guilty pleas. “The message here should be clear,” Garland said. “Using new technology to break the law does not make you a disrupter; it makes you a criminal.”

Zhao’s sentencing is scheduled for Feb 22, he is looking at five to ten years in prison, with also having to pay the billion-dollar fine.