Sam Bankman- Fried: Failure to Set a Compliance Program for the Violation of Binance and the Bank Secrecy Act

Zhao has a reputation for being a cowboy with a penchant for breaking US laws. Sam Bankman- Fried, CEO of FTX, stated in October of that year that he was excited to see Zhou repping the industry in DC. He is still able to go to DC. A week after that, Zhao tweeted he’d sell his holdings of FTX’s token in response to a blockbuster story in CoinDesk. The amount was large, since FTX had been an early investor. “We won’t support people who lobby against other industry players behind their backs,” Zhao said.

Binance allowed sanctions violations of more than $898 million, according to prosecutors, and “violated US law on an unprecedented scale.” The Bank Secrecy Act (BSA), as well as other US laws, didn’t comply with Zhao and other executives. Iranian customers were able to transact over one million dollars with US customers in violation of sanctions. Other sanctioned countries, such as Cuba and Syria, were able to transact as well.

Richman says the willingness to plead guilty and take responsibility will count in his favor, but he also says that the judge will be influenced by evidence of his disregard for the law. One could expect that respect for the law will be a factor in the judge’s decision on the sentence for those who broke the law.

Zhao started the run on FTX by publicly broadcasting his trade. A jury convicted Bankman- Fried of seven counts of conspiracy and fraud and sentenced him to 25 years in prison.

In coming to an appropriate sentence for Zhao, the judge was required to “look past the guidelines” and factor in context beyond the facts of the underlying crime, says Daniel Richman, a professor of law at Columbia University and former federal prosecutor. The factors include the character of the defendants, likelihood of recidivism, past infraction, and other factors.

In the letter to the judge in advance of the meeting, Zhao apologized for his behavior and accepted responsibility for the failure to establish an effective compliance program. He wrote that he regrets his choices that result in him being before the court. Please accept my assurance that this is my only experience with the criminal justice system.

Daniel Silva is an attorney at law firm Buchalter and a former US prosecutor. “CZ pleaded guilty to not following the law as required of a financial institution executive. He was using customer funds for personal gain and using fraudulent statements.

In their own presentence filing, Zhao’s counsel made a thinly-veiled reference to the distinction. They wrote that the man had been found guilty of an anti-money-laundering compliance failure. “He has not defrauded any investors, there has been no misappropriation of customer funds.” They seemed to be saying their client is not a SBF.

Last year, the DOJ obtained a number of landmark conviction in the field ofCryptocurrencies. “Whether people criticize the sentence as too light, it sends a healthy message,” says Silva. The aim is to “deter the next crypto or financial institution CEO from thumbing their nose at anti-money-laundering regulations.”

The prosecutor had asked for three years, but Judge Richard Jones handed down a lighter sentence than they had requested.