Two figures once considered to be titans in the crypto industry are going to prison in the United States for drastically different amounts of time.
Since the sentencing hearings for former FTX CEO Sam “SBF” Bankman-Fried and former Binance CEO Changpeng “CZ” Zhao, many in and out of the crypto space have questioned why the two industry leaders have received such different treatment in the U.S. legal system. Bankman-Fried could be in his fifties by the time he leaves prison and will likely have fewer assets than Zhao, who will be out of prison by the end of the year and, according to Forbes, has an estimated net worth of $33 billion.
But let’s back up a minute.
Bankman-Fried was arrested in 2022, extradited to the United States, pleaded not guilty, given house arrest, remanded to jail after allegations of witness intimidation, prosecuted in a six-week trial, found guilty and sentenced to 25 years in prison. Zhao was charged in 2023, pleaded guilty, was allowed to remain free on bail, was sentenced to four months in prison and will surrender himself in a matter of days.
The former FTX CEO faced seven felony charges related to defrauding investors and misuse of customer funds. CZ faced one charge related to failure to maintain an effective Anti-Money Laundering program at Binance.
“CZ was charged with a crime that is more akin to a regulatory violation: the failure to have an adequate system of Anti-Money Laundering controls, while SBF was charged with wire fraud in connection with the secret plundering of billions of dollars in crypto custodied with FTX to prop up Alameda,” Mark Bini, a former assistant U.S. attorney in the Eastern District of New York, told Cointelegraph. “While both [crimes] are serious, SBF’s crime was far more serious.”
From the beginning of his legal woes, Bankman-Fried and his defense team have largely maintained that he “did what [he] thought was right.” In the sentencing hearing, Judge Lewis Kaplan accused the former FTX CEO of lying on the stand and described his testimony as “evasive.” His first interview after the judge laid down a 25-year judgment included SBF saying: “I never thought that what I was doing was illegal.”
The facts of the case presented at trial also undermined SBF’s defense. Many government witnesses, including his former girlfriend and Alameda Research CEO Caroline Ellison, suggested that he orchestrated the misuse of FTX user funds.
In contrast, Zhao did not publicly comment on the case between U.S. authorities and Binance since a $4.3 billion settlement and his guilty plea in November 2023. He submitted hundreds of pages worth of letters from industry leaders, family members and others. Judge Richard Jones commented on the outpouring of support for CZ at his sentencing hearing, adding he had “risked [his] entire net worth” for Binance.
“Even though I believe he was guilty of much more, the DOJ didn’t have the evidence, and that’s why they could only get CZ to admit to rather light crimes,” Swan Bitcoin managing Director Terrence Yang told Cointelegraph. “Unlike SBF, [...] CZ didn’t fight extradition (was in a non-extradition country) and agreed to only light crimes in his plea deal. CZ is only paying $50 million in his plea deal with the DOJ.”
Related: Changpeng Zhao’s 4-month sentence a ‘general deterrence,’ says lawyer
Despite speculation from many crypto users, it is doubtful that CZ and SBF will share a cell while incarcerated, let alone be housed in the same facility. Though the judge in SBF’s case suggested that he would serve in a San Francisco Bay Area prison, he may also allow the former FTX CEO to stay in New York during his appeal. Zhao will serve four months at the Camp at the Federal Correctional Institution Sheridan in Oregon or the Federal Detention Center SeaTac in Washington, with a reporting date to be determined.
Magazine: ‘Less flashy’ Mashinsky set for less jail time than SBF: Inner City Press, X Hall of Flame
Update (May 1 at 8:45 pm UTC): This article has been updated to clarify where Changpeng Zhao will be serving his sentence.
