Binance founder Changpeng Zhao has been sentenced to four months in prison for breaking US anti-money laundering laws.
Technology
Binance founder’s sentencing hearing
Changpeng Zhao pleaded guilty to money laundering charges. Prosecutors have requested three years of prison time.
Prosecutors requested three years of prison time, double the sentencing guideline of 18 months, because the “scope and ramifications of Zhao’s misconduct were massive,” they wrote in their sentencing memo. Zhao’s lawyers, in their own sentencing memo, said that Zhao deserved no jail time, as “no defendant in a remotely similar BSA [Bank Secrecy Act] case has ever been sentenced to incarceration.”
Zhao pleaded guilty and stepped down from Binance as part of a settlement with the US Department of Justice in November. Additionally, Binance agreed to pay $4.3 billion in fines. As part of the agreement, Zhao has waived the right to appeal any sentence up to 18 months in prison. He also agreed to pay a fine of $50 million, a drop in the bucket compared to his estimated $33 billion fortune.
According to the US government, Binance knowingly evaded anti-money laundering regulations. As a result, Iranian, Cuban, and Syrian customers were able to transact in violation of US sanctions. Settlements with the CFTC and SEC were announced at the same time as Zhao’s guilty plea.
I’m here in Seattle for the hearing, follow along with all of my updates below.
Highlights
May 1
Elizabeth Lopatto
I have some questions about what Changpeng Zhao gave to the feds
There are a lot of differences between Changpeng Zhao and Sam Bankman-Fried, and now we can add one more to the list: the amount of time they’ll serve for their crimes. Bankman-Fried got 25 years; Zhao got four months.
There’s more. Zhao appeared in court in a tailored navy suit with a light blue tie when he spoke in his own defense. Bankman-Fried was shackled and in prison garb.
Apr 30
Elizabeth Lopatto
The rest of us are asked to remain sitting while he leaves. Unclear if there will be a press conference after.
Apr 30
Elizabeth Lopatto
The defense is requesting that Zhao be designated to SeaTac, at a date to be specified by the court. Zhao promises before the court that he will show up at the time, which is not yet decided.
Apr 30
Elizabeth Lopatto
We are taking a 10 minute break, but there are a few more matters to be ironed out.
Apr 30
Elizabeth Lopatto
Binance founder Changpeng Zhao sentenced to four months in prison
Binance founder Changpeng Zhao was sentenced to four months in prison for failing to establish adequate anti-money laundering protections. Zhao, once the head of the largest crypto exchange in the world, pleaded guilty in November 2023.
Judge Richard Jones says that Zhao prioritized “Binance’s growth and profits over compliance with US laws and regulations.” While Jones doesn’t think Zhao is likely to reoffend, the scale of the crime is notable.
Apr 30
Elizabeth Lopatto
But Jones isn’t going to take the government’s sentencing recommendation. He hasn’t yet announced the exact sentence.
Apr 30
Elizabeth Lopatto
He’s leaning forward, listening intently, and occasionally nodding.
Apr 30
Elizabeth Lopatto
However, the scale of the offense is remarkable, and Jones wants to consider deterring future crime. The letters sent to the court on Zhao’s behalf will play a significant role in the sentencing.
Apr 30
Elizabeth Lopatto
The court recognizes that he came voluntarily to the US, has not previously broken laws, and that he took “extraordinary steps and significant steps” in cooperation with law enforcement. But the nature of the events was “aggravating.”
Apr 30
Elizabeth Lopatto
After his brief remarks, he has now stepped down.
Apr 30
Elizabeth Lopatto
Zhao says he wants to create a platform for online education for underprivileged kids. “I find this new work extremely rewarding and meaningful.”
Apr 30
Elizabeth Lopatto
Addressing the courtoom before being sentenced, the Binance begins by saying, “I’m sorry,” and says he wants to take responsibility for his “mistakes.” He notes that Binance did implement a KYC/AML program, and that it is cooperating with the US government.
“In my mind, I wanted to do everything possible before stepping down as CEO.”
Apr 30
Elizabeth Lopatto
The judge is annoyed by this.
Apr 30
Elizabeth Lopatto
Judge Richard Jones is back on the bench, and we are about to hear from Changpeng Zhao himself.
Gotta say, the government has not exactly covered itself in glory here. If Zhao’s statement is convincing, he might not serve time at all.
Apr 30
Elizabeth Lopatto
Zhao will speak when we return.
Apr 30
Elizabeth Lopatto
And because he’s so well-known as a wealthy man, and because Binance is cooperating with the government, there’s a real risk in being in certain facilities, Burck says.
Apr 30
Elizabeth Lopatto
Will the sentence deter other people? Government said Zhao should be punished or else there will be a perverse incentive to do what Zhao did. Burck is arguing that prison time will tell people not to come to the US and accept responsibility for their crimes.
Apr 30
Elizabeth Lopatto
If the government wanted to put Zhao in jail for serious time, why did they let him plead to something with such a short sentence? It makes me wonder about the matter under seal we keep hearing about.
Apr 30
Elizabeth Lopatto
He and Burck are having a back-and-forth now about the appropriateness of jail time as recommended by the probation department.
Apr 30
Elizabeth Lopatto
We know from CZ’s messages quoted in multiple court cases that avoiding anti-money laundering controls was not exactly a mistake but a strategy. The language cuts against the idea that CZ is taking “full responsibility” for his misconduct...
Apr 30
Elizabeth Lopatto
👀
Apr 30
Elizabeth Lopatto
He’s making a strong case that the government’s request for three years is way out of line. CZ looks less unhappy listening to his lawyers speak; he’s listening intently, with his eyebrows up.
Apr 30
Elizabeth Lopatto
“When we read the government’s submission... it read to us like the kind of submission a desperate defendant would write” because it says, essentially, to ignore the sentencing guidelines.
Apr 30
Elizabeth Lopatto
Some of the filings have been sealed. Wonder what this is!!
Apr 30
Elizabeth Lopatto
He “admitted his mistake,” Bartlett says, and asks whether there is anything else CZ could possibly have done to show remorse. Bartlett says he can’t think of anything else.
Pagination
Page 1 of 2NextTechnology
Meta had its biggest lobbying quarter ever
Meta broke its own lobbying record and easily outspent its peers, lobbying on issues including kids online safety, content moderation, competition, and encryption.
Meta had its biggest lobbying quarter ever in the first few months of 2024, spending a record $7.6 million engaging with the US government, according to its public lobbying filing released last week.
It’s a 64 percent jump from its spending in the fourth quarter of 2023 and represents more than a third of what Meta spent on lobbying the entirety of last year. The blockbuster quarter underscores just how much pending legislation is aimed at Meta and its peers — on everything from data privacy, kids online safety, and content moderation.
Still, Meta says the sharp uptick is largely due to compensation for its lobbying team. “The increase in Meta’s lobbying expenditures is due principally to operating expenses, including changes to the timing of the biannual compensation structure and an elevated stock price,” Meta spokesperson Daniel Roberts said in a statement to The Verge.
Meta’s spending in the last quarter is an outlier among its big tech peers. It more than doubled the spend of Apple, Google, and Microsoft in the first quarter, which all spent closer to $2 or $3 million. Amazon spent the second most behind Meta at $4.4 million.
The most significant piece of tech legislation to pass recently was a bill that could ban TikTok unless its China-based parent company, ByteDance, divests it within a year — a law that Meta stands to directly benefit from if one of its closest competitors is forced to exit the US market. But Meta’s lobbying disclosure does not specifically list that bill as one it engaged on or the foreign aid package in which it passed. Meta’s Roberts confirmed the company did not lobby on the so-called Protecting Americans from Foreign Adversary Controlled Applications Act.
According to its Q1 disclosure, Meta lobbied on kids safety bills including the Kids Online Safety Act, Children and Teens Online Privacy Protection Act (COPPA), and Protecting Kids on Social Media Act (which would impose age verification for social media). It also engaged on the Foreign Intelligence Surveillance Act reauthorization and bills related to tech’s legal liability shield known as Section 230. Some other topics included international data flows, encryption, subsea cables, taxes, and political ads.
Meta set its previous lobbying record in the fourth quarter of 2021, when it spent $5.4 million. That period coincided with the revelations from former employee turned whistleblower Frances Haugen, who shared internal documents showing the company was aware of the harmful effects of its services on teens, among other findings.
Technology
Elon Musk goes ‘absolutely hard core’ in another round of Tesla layoffs
Barely two weeks after initiating layoffs for at least 14,000 staffers, Tesla is now reportedly laying off hundreds more — including the majority of its Supercharging team.
Barely two weeks after initiating layoffs for at least 14,000 staffers, Tesla is now reportedly laying off hundreds more — including senior executives and the majority of its Supercharging team.
According to an email first reported by The Information and then Electrek, the automaker’s senior director of EV charging Rebecca Tinucci is leaving the company on Tuesday, alongside most of the 500-person team she oversaw. Tesla’s head of the new vehicles program, Daniel Ho, is also out along with his team. These cuts come in addition to the recent 10 percent workforce reduction — and Musk’s email leaves room for more.
In the email sent to executives last night, Musk said he wants Tesla to be “absolutely hard core” about the cuts, and that staffers working under executives who “don’t obviously pass the excellent, necessary and trustworthy test” would also be out of a job. While the full scale of these new layoffs is unclear, Bloomberg previously reported that Tesla’s total headcount reduction that began earlier this month could end up being as high as 20 percent of its workforce, or well in excess of 20,000 employees.
Tinucci was notably responsible for the rollout of Tesla’s Supercharger network during her six years at the company, including efforts to get other companies to adopt the North American Charging Standard (NACS) developed by Tesla. In his email, Musk says Tesla will still build new Superchargers and complete those already under construction.
Others impacted by the new layoffs include Daniel Ho, a ten-year Tesla veteran who served as director of vehicle programs and new product initiatives, and as program manager for the Model S, 3, and Y vehicles. Most of the public policy team led by former head of policy and business development Rohan Patel (who left the company during the previous wave of layoffs) are also being let go.
These latest job cuts follow what’s already shaping up to be a terrible year for Tesla. The company’s stock price has taken a beating as profit margins sunk to six-year lows amid price reductions that came in response to increased competition and lower demand for EVs. It’s also dealing with a plethora of reputational issues impacting its brand — including never-ending investigations into its Autopilot feature, a recall of its Cybertruck, and Musk’s contentious behavior both online and in the courtroom.
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