CZ Sentencing Letters Paint Former Binance CEO as Devoted Family Man, Friend

As a crypto investor with experience in the industry, I closely follow the developments of key players and their impact on the market. The ongoing sentencing hearing for Binance co-founder Changpeng “CZ” Zhao has caught my attention due to its significance within the community.

Approximately 160 individuals, including family members, friends, and professional associates of Changpeng “CZ” Zhao, have penned letters to the presiding judge in Washington prior to Zhao’s sentencing scheduled for tomorrow. These letters depict Zhao as a loving father, a loyal friend, and an unassuming tech enthusiast who prefers to shy away from extravagant purchases despite possessing substantial wealth.

Last November, Zhao, aged 47, admitted to breaking the Bank Secrecy Act by neglecting to establish a robust anti-money laundering (AML) system at Binance during its initial phase.

The Department of Justice proposes that the judge impose a more severe punishment than usual – a three-year prison term, which is twice as long as the maximum suggested by sentencing guidelines and harsher than what’s commonly given in similar cases. These penalties often result in probation or time already served.

In the filing submitted last week, Zhao’s legal team highlighted precedents where individuals were given probation after breaching the BSA. For instance, in the 2014 case, U.S. v. Miller, the CEO of a domestic financial institution received a probation sentence for neglecting to establish an adequate Anti-Money Laundering (AML) program or submit Suspicious Activity Reports (SARs).

Zhao’s legal team advises for their client to receive probation instead of incarceration, a penalty similar to that of Arthur Hayes, BitMEX’s co-founder, who admitted guilt in 2022 and was given six months of home confinement and two years of supervised release.

“Despite being involved in a high-profile case, Mr. Zhao’s legal team stressed that he is not merely a representation or symbol. Instead, they presented him as a caring father and philanthropist. He has expressed regret for his actions and more crucially, taken steps to make amends.”

The 161 documents submitted to the court supported Zhao’s legal arguments, yet they offered a unique perspective into the secluded world of Binance’s enigmatic founder, revealing intriguing insights about his personal life and past.

Humble origins

I came across the intriguing story of Zhao, currently valued at over $40 billion based on Bloomberg’s Billionaires Index. Once an underprivileged first-generation immigrant in Canada, he was among the poorest in our high school social circle and had to work part-time jobs at McDonald’s to help support his family and have some pocket money for personal expenses. This account was shared by none other than Ted Lin, a former high school friend and later colleague of Zhao at Binance.

According to his former classmates, Zhao stood out at high school for being an brilliant scholar and a strong athletic figure. He assumed the role of captain for the school volleyball team having self-taught himself the game by meticulously studying library books on volleyball techniques. (Lin’s letter stated)

Family man

The court documents additionally disclosed that Zhao is the father of five offspring: two older children, who are married to Winnie Yang and studying in American universities, and three younger ones, born from his relationship with Yi He, a co-founder of Binance and current partner.

According to both Zhao’s current and former partners, he is a devoted father.

In her court letter, Yang, Zhao’s spouse, expressed that despite Binance undergoing significant expansion, he consistently made time for his teenage children. He traveled to Tokyo to address their school concerns and joined his middle school-aged son during Boy Scout camping excursions in the Japanese countryside.

Yang acknowledged and praised her former spouse’s charitable acts, such as contributing to disaster relief efforts in Turkey for earthquake victims and constructing schools in Africa. She remarked, “He has accomplished so much that he might have forgotten about it himself.”

I’ve analyzed the situation and found that his current partner has expressed that his children have developed a strong bond with Zhao, and they have felt the impact of his absence during the past five and a half months.

“Now they are always asking: Why isn’t Dad home? When can Dad come back?,” He wrote.

‘Apathy toward hedonism’

As a researcher, I came across the testimony given by an individual regarding Zhao’s apathy towards lavish possessions. This sentiment was echoed by several members of his family, friends, and associates during my investigation.

I’ve noticed that Zhao doesn’t share the same passions as the wealthy crowd when it comes to jewelry, luxury goods, art auctions, or even high-end cars. Instead, he prefers to buy his clothes online from Amazon, uses a scooter for short commutes, and drives a Toyota minivan.

A friend of Zhao’s shared that they visited his residence in Singapore towards the end of 2021, when cryptocurrency trading activity reached unprecedented levels. To their amazement, despite the financial boom, Zhao was living within his budget in a three-bedroom apartment filled with kid’s toys. He managed Binance, the renowned crypto exchange platform, from the comfort of his dining room table.

The friend’s characterization of Zhao’s alleged indifference to hedonistic pleasures resonates with reports from Sam Bankman-Fried’s inner circle regarding his own supposed disinterest in worldly indulgences, prior to the latter’s sentencing.

In their letters to the judge, Bankman-Fried’s family tried to portray him as having no interest whatsoever in wealth, lavish living, or associating with celebrities who endorsed his firm. However, the skeptical judge did not buy this image and sentenced Bankman-Fried to 25 years in prison for his offenses.

The judge in Zhao’s case may have a different perspective when the hearing continues tomorrow, despite the distinct differences between Zhao’s and Bankman-Fried’s cases. Bankman-Fried refused to admit fault or express remorse during his trial, while Zhao had confessed guilty last year.

As an analyst, I would put it this way: I notice a significant distinction between the two cases. Zhao’s exchange didn’t declare bankruptcy and remains functional at present. On the other hand, Bankman-Fried’s platform filed no such petition, resulting in approximately $8 billion in losses for customers worldwide.