Author: Wen Shijun

Source: Prism

The richest prisoner in American history has been released from prison.

On September 27, Zhao Changpeng, the founder and former CEO of Binance, was released two days ahead of schedule after completing a four-month sentence, appearing on the streets of Long Beach, California as a free man.

Although he was imprisoned in the United States, Zhao Changpeng is not an American. He was born in Jiangsu, China, and holds dual citizenship in Canada and the United Arab Emirates.

Zhao Changpeng was once a programmer developing trading software. In 2017, he founded Binance in Shanghai. Within a few years, Binance rapidly grew to become the world's largest cryptocurrency exchange, with a market share that exceeded 2/3 at its peak and still remains above 50%.

By September 2024, Binance's cumulative trading volume exceeded $100 trillion. The cryptocurrency "Binance Coin (BNB)" issued by Binance itself has risen from $0.1 in 2017 to approximately $605 at present.

In 2021, Zhao Changpeng's wealth briefly reached $94.1 billion, making him the richest Chinese person globally. Before his sentencing in the United States in April of this year, this figure remained as high as $39.7 billion, ranking him 38th on the global rich list.

Originally, Zhao Changpeng's prison term in the United States was scheduled to end on September 29. However, due to the release date falling on a weekend, according to U.S. law, he was allowed to leave the Long Beach Residential Reentry Management Center (Long Beach RRM) on September 27 (Friday).

His lawyer told the media that Zhao Changpeng did not wish to be interviewed on the day of his release.

On the day of his release, 47-year-old Zhao Changpeng's personal wealth continued to decline to $30 billion, but he still remains the richest person in Canada and is ranked 61st on the global rich list, just below Li Ka-shing, whose net worth is $30.3 billion.

Voluntarily flying to the United States to plead guilty, record-breaking settlement amount

On the social media platform X (formerly Twitter), Zhao Changpeng's current personal profile only consists of one sentence: Co-founder and former CEO of Binance, holder of Binance Coin and Bitcoin.

In fact, Zhao Changpeng stepped down as the CEO of Binance, which he co-founded, as part of the agreement reached with the United States.

In response to the U.S. scrutiny of Binance and himself, on November 21, 2023, Zhao Changpeng went to the United States and signed a plea agreement with the U.S. Department of Justice. In the agreement, Zhao Changpeng admitted that Binance had failed to implement an effective anti-money laundering program, violating the U.S. Bank Secrecy Act, and intentionally violated U.S. economic sanctions.

For a long time prior to this, although Binance had established a cryptocurrency trading platform, Binance.US, that complied with U.S. laws and regulations, it still allowed and even encouraged some U.S. users to prove that they were "not in" the U.S. in order to use Binance, which operated outside the U.S. regulatory system, for cryptocurrency trading.

After all, being free from regulation is one of the most important aspects of cryptocurrency's existence and a significant reason for Binance's growth.

According to the plea agreement, Zhao Changpeng was required to pay a personal fine of $50 million, resign as CEO of Binance, and refrain from participating in any activities related to Binance for three years. On the same day, Binance announced that Richard Teng, a Singaporean, would take over as CEO.

On the same day, Binance reached settlements with the Financial Crimes Enforcement Network (FinCEN) and the Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury, paying fines of $3.4 billion and $968 million, respectively, setting the record for the largest settlement amount in the history of the U.S. Department of the Treasury.

In addition, the Commodity Futures Trading Commission (CFTC) also reached a settlement with Binance on November 21, 2023, requiring Binance to pay $1.35 billion in "ill-gotten gains" and an equal amount in fines. Zhao Changpeng himself was also required to pay a fine of $150 million to the commission.

However, this comprehensive settlement agreement did not include the 13 charges brought by the U.S. Securities and Exchange Commission (SEC) against Binance for violating U.S. securities laws. This lawsuit has not been concluded, and recently, as Zhao Changpeng's release date approached, the SEC reiterated the issue of Binance's violation of federal securities laws.

In August of this year, three cryptocurrency investors filed a lawsuit against Binance and Zhao Changpeng, accusing them of laundering stolen funds through Binance.

These pending cases have made it uncertain whether Zhao Changpeng will be able to return to his home in the United Arab Emirates immediately after his release. Last year, Zhao Changpeng "voluntarily" flew to the United States to sign the plea agreement, intending to leave the United States immediately after signing and return to his home in the United Arab Emirates.

According to an investigation by Forbes magazine, in October 2021, Zhao Changpeng purchased a 1077.68-square-meter, six-bedroom apartment in Dubai for $13.5 million.

The apartment is located in the luxury residential building "118" in the center of Dubai, which is 45 stories high and has only 28 fully furnished luxury apartments. One of the key selling points of these apartments is the 3.5-meter floor-to-ceiling windows, allowing residents to enjoy a 360-degree view of the magnificent city skyline of the Dubai Financial District.

A bedroom in the 118 apartment displayed on a luxury home trading website, source: luxhabitat.ae

It is worth mentioning that in 2014, Zhao Changpeng sold his property in Shanghai and instead purchased Bitcoin worth approximately $1 million at a price of about $600 per coin, becoming a staunch "non-property buyer."

In May 2018, during an online exchange event hosted by Binance, his partner He Yi revealed that Zhao Changpeng had neither purchased real estate nor a car. Zhao Changpeng himself has emphasized the importance of asset liquidity in his personal wealth management and explained that avoiding real estate purchases is due to the relatively low liquidity of real estate.

Purchasing real estate in Dubai is also seen as a gesture of goodwill towards Dubai, as he had hoped to establish Binance's global headquarters in Dubai.

Prosecutors hoped for a three-year sentence, 161 people jointly petitioned the judge for leniency

In U.S. judicial practice, plea agreements are very common. According to data from the American Bar Association, approximately 98% of federal criminal cases in recent years have been resolved through plea bargains and guilty plea agreements.

Zhao Changpeng "voluntarily" flew to the United States, admitted guilt at a personal level and on behalf of Binance, paid substantial fines for criminal and regulatory settlements, and promised that Binance would operate in the United States in accordance with U.S. laws and regulations, all in the hope of receiving a lighter sentence.

According to the plea agreement, the maximum sentence Zhao Changpeng agreed to with the Department of Justice was 18 months.

This was already a "lenient" approach. Just over a month before Zhao Changpeng was sentenced, on March 28, Sam Bankman-Fried, the "post-90s" co-founder and CEO of FTX Exchange, known as the "Jewish King of the Coin Circle," was sentenced to 25 years in prison for large-scale fraud.

However, 18 months was still too long. In order to further reduce the sentence, Zhao Changpeng hired top lawyers Benjamin A. Naftalis and William A. Burck.

Zhao Changpeng himself, as well as his family, partner, friends, political and business leaders, colleagues, industry experts, Binance angel investors, and users, a total of 161 people, jointly submitted a plea letter to the judge.

In a letter he wrote to the judge, Zhao Changpeng said, "I apologize for my wrong decisions and take full responsibility for my actions."

He also explained the reason for coming to the United States to be punished: "I don't like leaving unresolved issues. That's why I 'surrendered' voluntarily and took responsibility—because I want to resolve the issues in court and then start over."

In a plea letter, Zhao Changpeng's partner He Yi wrote, "As CZ's life partner, I have known CZ for nearly ten years." CZ is an abbreviation of Zhao Changpeng's name and is also his self-claimed and the "coin circle's" way of addressing him.

In the letter, He Yi stated that Zhao Changpeng leads a simple life and is "completely ignorant of the enthusiasm of the rich for jewelry, luxury goods, luxury cars, and art auctions," and "makes every effort to spend high-quality time with his three young children amidst his busy work. The children are very close to him, and now they always ask: Why isn't daddy at home? When can daddy come back?"

He Yi believes that Zhao Changpeng's "biggest mistake is ignorance," not deliberate wrongdoing. In fact, apart from Richard Teng, a professional manager from Singapore who replaced Zhao Changpeng as CEO of Binance, He Yi is the "realist" of Binance after Zhao Changpeng's departure.

The Wall Street Journal reported that He Yi holds at least 10% of the shares of Binance's Cayman Islands holding company and has become the largest shareholder of Binance in Zhao Changpeng's absence. In Zhao Changpeng's absence, He Yi has "broad control" over Binance's marketing and investment business and also "exerts influence" in board elections.

Zhao Changpeng's wife, Yang Weiqing, also expressed in her plea letter: "He rarely misses any opportunity to personally take care of the children, changing diapers, feeding, accompanying the children on trips, and so on."

Yang Weiqing referred to Zhao Changpeng as "Changpeng." She continued in the letter: "Changpeng has also been taking care of my family for many years. He helped my parents buy a house in Tokyo and also helped my nephew find a job." She pleaded with the judge for a lenient sentence, giving Zhao Changpeng a chance to continue taking care of his loved ones.

Planned to write a book in prison, allowed to watch movies during the sentence

On the morning of April 30, 2024, the day of the trial, Zhao Changpeng, dressed in a blue suit with a light blue tie, was "on pins and needles" while waiting for the delayed court session.

This was because just a week earlier, the U.S. Department of Justice had raised the requested sentence to three years. According to U.S. law, the judge has corresponding discretionary power.

In the end, African American federal judge Richard A. Jones sentenced Zhao Changpeng to four months in prison, far below the prosecutor's recommended three-year sentence.

Obviously, Zhao Changpeng and his associates were satisfied with this outcome.

He posted on the social media platform X, "Thank you for your concern and support, whether it's through letters, on X, or in any other form of support." He stated that he would "focus on the next chapter of life: education." He also didn't forget to give a "soft advertisement" for Binance's Secure Asset Fund for Users (SAFU) in the post.

Subsequently, He Yi retweeted a social media post from Zhao Changpeng on March 6, 2023, with the caption "Remember 4," and commented "Got it." It seems that Zhao Changpeng and those around him had already "foreseen" the four-month sentence.

Zhao Changpeng began serving his sentence one month after the judgment. While waiting to serve his sentence, Zhao Changpeng indicated in an interaction with He Yi on X that he might use the time during his sentence to write an autobiography:

"I will have some 'quiet' time and will use this time to write something." He Yi retweeted this and wrote in a somewhat "internal circulation" style of English: "Want to know how CZ grew from a McDonald's hourly worker to the founder of Binance? Do you want to know the secret of Binance's success?"

However, in reality, Zhao Changpeng's quiet time may not be that long. The sentence itself is not long, and after serving about two months at the Federal Detention Center SeaTac (FDC SeaTac), Zhao Changpeng was transferred to the "Halfway House" in Long Beach (Long Beach RRM) for reintegration into society.

According to a prison staff member quoted by Forbes magazine, at the halfway house, Zhao Changpeng can go out under supervision and even watch movies.

It is unknown whether this arrangement has affected the progress of writing the autobiography.

Or perhaps, the U.S. punishment of Zhao Changpeng is not meant to suppress him mentally or physically, but to make a statement to the cryptocurrency world.

With Zhao Changpeng's admission of guilt, sentencing, and imprisonment, the U.S. regulatory attitude towards the cryptocurrency industry has become increasingly clear: not a complete ban, but stricter regulation will be implemented.

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