In a letter addressed to Judge Richard A Jones of the United States (US) District Court for the Western District of Washington on 24 April, Binance founder and former CEO Changpeng Zhao (CZ) expressed regret for his past actions, acknowledging his mistakes and accepting full responsibility.
He wrote:
"I apologise for my poor decisions and accept full responsibility."
Acknowledging his past oversights, CZ recognised the need for implementing compliance changes at Binance sooner, highlighting the subsequent implementation of stringent controls during his tenure.
He stressed his voluntary surrender and acceptance of responsibility in the ongoing case, expressing a desire to resolve matters before the court to pursue new opportunities.
CZ appealed for a second chance, recounting his unconventional career path marked by simplicity and integrity, including the return of investor funds after failed startup ventures.
Additionally, he portrayed his involvement in crypto as driven by ideals of inclusivity and equal opportunity, aiming to support small biotech labs and youth-centric initiatives in the future.
He ended his letter expressing his regret:
“Words cannot explain how deeply I regret my choices that result in me being before the Court Rest assured that it will never happen again. Please accept my assurance that this will be my only encounter with the criminal justice system and that going forward I will live my life in a manner that will make everyone proud.”
Notably, significant family members of CZ, including his wife, two children attending US institutions, and his sister, a former managing director at Morgan Stanley, were publicly mentioned for the first time among the 161 letters of support seeking leniency for him.
Jessica Zhao, former Managing Director at Morgan Stanley, acknowledged her brother's mistakes while highlighting his commitment to doing good for others.
She referenced the fallout with FTX and emphasized that CZ ensured Binance maintained integrity by never misusing customer funds.
He Yi, a fellow Binance co-founder and mother of CZ's three children, described him as the guardian of the cryptocurrency industry, likening it to the Wild West.
She noted the regulatory uncertainty even in the US:
“Even the U.S. has not decided how to regulate and define this industry. As a founder who has never managed a company of this size, he was sure to encounter blind spots."
CZ's children, Rachel and Ryan, shared stories of their supportive father and urged the judge to consider his character beyond this single incident.
Meanwhile, CZ's wife, Yang Weiqing, highlighted Binance's philanthropic efforts, such as donating tens of millions of yen to disaster-stricken areas in Japan in 2018, despite withdrawing from the Japanese market shortly before.
Yang Weiqing's Translated Letter
A significant letter of support arrived from Tigran Gambaryan, Binance’s Head of Financial Crime Compliance and a former special agent in the US Department of Treasury.
However, at present, he finds himself detained in a Nigerian jail amid a dispute involving Binance and Nigeria.
It is worth noting that the letter was penned on 1 January 2024, before his arrest.
In his letter, he penned:
“While acknowledging CZ's prior missteps, I can attest to his integrity, business insight, and philanthropic actions have had a ripple effect, influencing not only Binance's corporate philosophy but also positively impacting lives globally.”
The array of letters submitted included contributions from figures such as JAN3 CEO and former Blockstream CSO Samson Mow, Bitfury Group CEO Val Vavilov, Paxos Asia CEO Richmond Teo, former US Ambassador to China Max S Baucus, along with academics like Professor Jeremy R Cooperstock from McGill University and Associate Professor Ronghui Gu from Columbia University.
Noteworthy support also came from Sean Yang, a Managing Director at Morgan Stanley, and members of the ruling family in the United Arab Emirates.
These letters collectively paint a picture of CZ as a dedicated CEO committed to both Binance and his family, leading a humble life.
Descriptors used by some writers included "honest," "hard-working," "modest," and "disciplined."
While some letters explicitly appealed for leniency in sentencing, CZ refrained from directly requesting a reduced sentence in his own letter.
CZ's legal team has advocated for a probationary sentence, citing concerns about his vulnerability to negative influences in prison, given his social status and lack of experience with incarceration.
They submitted multiple affidavits to the US District Court for the Western District of Washington, Seattle, including observations from Palmquist regarding potential challenges he may face if incarcerated in the state's custody.
While the US sentencing guidelines allow for a maximum of 10 years in federal prison for CZ's charges, the recommended duration is typically between 12 to 18 months.
However, prosecutors have pushed for a harsher sentence of three years imprisonment and a $50 million fine.
Former SEC official John Reed Stark brought attention to the DOJ's lawsuit filed with the US Federal Court in Seattle, seeking a 36-month prison sentence for Binance founder CZ on charges of violating anti-money laundering laws (AML) in the US.
John, a seasoned SEC veteran, highlighted CZ's upcoming 30 April sentencing, suggesting that the court may take a stern stance on CZ's role in Binance's alleged facilitation of criminal activity.
This development raises significant concerns about Binance's adherence to legal obligations and compliance with US financial regulations, prompting questions about the integrity of its operations.
He added:
“The seriousness of Zhao's offenses should be reflected in his sentence, the SEC veteran said. He continued “Financial institutions are the first line of defense for the U.S. financial system.”
Despite previously waiving the right to appeal any sentence up to 18 months, the DOJ now seeks a 36-month term, citing the severity of his deliberate violation of US law.
Currently out on a $175 million bail bond, CZ's legal situation remains complex.
CZ faces the prospect of being incarcerated at the Federal Detention Center (FDC) SeaTac in Washington following his guilty plea to money laundering charges.
Notably, FDC SeaTac has housed individuals of significance, including a member of the Proud Boys and 'crypto-anarchist' Jim Bell.
Former warden Robert Palmquist has highlighted concerns such as the lack of natural lighting and staffing at FDC SeaTac.
Situated in the southern part of Seattle-Tacoma International Airport, the facility currently houses 794 inmates.
Given CZ's prominence and financial standing, his security arrangements may present challenges, raising concerns about his safety.
Changpeng Zhao is about to find out if he will become the richest prisoner ever in the U.S. His situation is different from FTX’s, as he has friends on the company’s board, his ownership of the exchange is intact, and the mother of his child is helping run the thing.
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