Two prominent figures in the cryptocurrency industry are facing vastly different prison sentences in the United States. The contrasting treatment of former FTX CEO, Sam “SBF” Bankman-Fried, and former Binance CEO, Changpeng “CZ” Zhao, has raised questions among observers. Bankman-Fried could spend most of his fifties behind bars, while Zhao is expected to be released by the end of the year. Zhao, who has an estimated net worth of $33 billion, is likely to retain a significant amount of his wealth compared to Bankman-Fried.
To understand the disparity, let’s go back to the beginning. Bankman-Fried was arrested in 2022, extradited to the United States, pleaded not guilty, placed under house arrest, sent to jail following allegations of witness intimidation, underwent a six-week trial, was found guilty, and sentenced to 25 years in prison. On the other hand, Zhao was charged in 2023, pleaded guilty, remained free on bail, received a four-month prison sentence, and will surrender himself in a matter of days.
Bankman-Fried faced seven felony charges related to defrauding investors and misusing customer funds. CZ, on the other hand, faced one charge related to the failure to maintain an effective Anti-Money Laundering program at Binance.
Mark Bini, a former assistant U.S. attorney, explained the difference in charges: “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. While both [crimes] are serious, SBF’s crime was far more serious.”
Bankman-Fried and his defense team have maintained throughout the legal proceedings that he acted in what he believed to be the right way. However, during the sentencing hearing, Judge Lewis Kaplan accused Bankman-Fried of lying on the stand and described his testimony as evasive. In his first interview after receiving the 25-year sentence, Bankman-Fried stated, “I never thought that what I was doing was illegal.”
Contrary to Bankman-Fried, Zhao refrained from publicly commenting on the case between U.S. authorities and Binance after reaching a $4.3 billion settlement and pleading guilty in November 2023. Zhao submitted numerous letters of support from industry leaders, family members, and others during his sentencing hearing. Judge Richard Jones acknowledged the overwhelming support for Zhao and mentioned that he had “risked his entire net worth” for Binance.
Terrence Yang, Managing Director of Swan Bitcoin, expressed his belief that Zhao was guilty of more offenses but the Department of Justice lacked the evidence. Yang said, “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.”
Despite speculation, it is unlikely that Zhao and Bankman-Fried will be imprisoned together or housed in the same facility. While the judge in Bankman-Fried’s case suggested he would serve his sentence in a San Francisco Bay Area prison, he may be allowed to stay in New York during his appeal. Zhao, on the other hand, will serve his four-month sentence at either the Camp at the Federal Correctional Institution Sheridan in Oregon or the Federal Detention Center SeaTac in Washington, with the reporting date yet to be determined.