Arthur Hayes, BitMEX’s founder, has claimed that Binance and Changpeng ‘CZ’ Zhao, its ex-CEO, were selected for ‘ridiculous’ punishment at the United States legal system’s hands. In a lengthy blog post, he said that Binance’s and Zhao’s treatment is irrational, asserting that it ‘depicts the punishment’s arbitrary nature at the state’s hands.
Hayes said the $4.3B fine imposed on the exchange was excessively harsh compared to the handling of ‘Too Big to Fail’ bank chief executives behind the 2007-2008 financial turmoil. He added that they acquired a free pass since their prosecution would endanger the banking system.
BitMEX Founder Condemns US Regulators
Hayes also said that Zhao’s sudden rise from an ‘unknown person’ to ‘one of the wealthiest persons on the planet in less than ten years’ depicted a challenge to the ‘political and financial establishment.’ This entailed eliminating institutions and controlling persons ‘not belonging to their class.’
Earlier this month, Zhao resigned as Binance’s chief executive officer after he pleaded guilty to anti-money laundering contraventions. The exchange paid $4.3B to settle AML and sanctions contraventions and agreed to leave the United States market altogether.
Zhao put up $15M as part of a private plea deal and had guarantors provide $5M in security for a bond of $175M. He faces a jail sentence of up to ten years and should pay a fine of $50M. In the ruling, a judge said Zhao should stay in the United States awaiting his sentencing in February next year.
Binance Receives Absurd Treatment
The United States Department of Justice (DOJ) said that Zhao ‘disregarded its legal mandate in the quest for profit.’ It served United States users without appropriate controls and allowed funds linked to crimes such as terrorism and hacking to flow via the exchange.
Additionally, Binance did not stop more than $898M in illicit trades between the United States and residents in sanctioned nations such as Iran. In 2020, Hayes resigned as BitMEX’s chief executive officer after the Commodity Futures Trading Commission (CFTC) accused the exchange of money laundering and running unlawfully in the United States.
Besides, he was charged by the United States Attorney for the District of New York with contravening the Bank Secrecy Act.
Meanwhile, the Binance settlement raises concerns on possible handling of other crypto exchanges facing similar charges including Coinbase and Kraken. Coinbase was charged hours apart from Binance lawsuit accused of commingling functions and offering unregistered securities.
A recent development saw SEC Kraken alleging similar concerns. The move triggered criticism of SEC’s regulation by enforcement approach as punitive and likely the reason for mass exodus by crypto talent and innovation from the US.
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