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Comment by blackhawkC17 | Hacker News Reader

CZ is wise, the opposite of SBF. He willingly pled guilty and got to keep his Binance majority stake worth tens of billions. He didn't run his mouth endlessly and gift a case to prosecutors like SBF did. Most importantly, he let people trade shady shitcoins but never stole customer funds. He'll spend just four months in a minimum security prison, come out and sail into the sunset with his billions. If you make things easy for prosecutors, especially as a first-time offender, they'll make things easy for you.

I don't admire crypto, but CZ played his cards well. Bloomberg quipped that he'll hold the title of richest inmate in the US, lol

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That 4-month jail term didn't come free: he's also paying a $4bn fine to the DOJ, which is likely a big chunk of the money he made. Binance is also being pushed out of operating in a lot of countries, so he won't have the same potential to make billions more in what was a Wild West market.

https://www.wsj.com/finance/regulation/binance-copped-a-4-bi...

For clarity, he's paying a $50M fine; Binance is paying a multi-billion dollar fine. The latter is not measured against the "money he made", but instead the value of Binance.

And Binance will come out of this a relatively "legitimate" major player, which makes it worth the costs.

Binance money is effectively CZ's money, he's likely the majority owner.

...Zhao is widely reported to have an estimated 90% stake in Binance.[1]

[1] https://www.cnbc.com/2024/04/30/binance-founder-changpeng-zh...

> He'll spend just four months in a minimum security prison

Probably on work release during the day.

It's not even a time out. He's just going off to sleep at summer camp for a few months.

CZ also came to the US willingly as opposed to Do Kwon who went on the run.

Except for the possibility of extortion while in prison.

I would bet if he had to do this again CZ would never have left UAE. There is no extradition treaty. He was expecting _no_ prison time.

He may be wealthy but he will always be a criminal who achieved wealth by knowingly doing business with criminals, got caught and served time in federal prison as a result.

It sounds to me as if this parent comment is expressing admiration. For a convicted criminal.

> Most importantly, he let people trade shady shitcoins but never stole customer funds.

Can't highlight your "most importantly" enough. At the end of the day, CZ didn't follow regulations, which certainly gave lots of shady characters access to money transfers who otherwise would have been blocked had those regulations been followed. But for everyday joes that just gambled and lost, it's hard to feel much sympathy (especially since plenty have gambled and won). But unlike FTX, Binance didn't flat out commit theft. Do that with enough money and you're screwed.

> But unlike FTX, Binance didn't flat out commit theft.

Is that true? I believed they took 'loans' out of customer funds then manipulated the markets to close the holes-- sounds a lot like what FTX was attempting but without being so amphetamine addled that they couldn't pull it off.

It is well known that Binance, among many other crimes, runs many internal trading desks which trade against Binance's own customers.

wholey hell does crime ever pay. I bet upwards of 80% of the working population would gladly do 4 months of time to never have to work another day in their life

I bet way more than 80%.

Seriously who wouldn't take that trade haha. That being said, I think it takes a certain kind of person to do all of this stuff and not fold to the stress in the first place

> Most importantly, he let people trade shady shitcoins but never stole customer funds

This undersells his crimes and overstates SBFs. The head of compliance for Binance sent a freakin text message to a peer saying "We’re operating an unlicensed broker in the US, bro" along with numerous communications about intentionally facilitating money laundering, sanctions evasions and a host of other securities law violations.

SBF, based on what was published in Michael Lewis' "Going Infinite", didn't really steal customer funds, he just did a negligently bad job of running the bank of crypto. When you put money into your checking account, the bank doesn't hold it in a vault, they re-lend it out as mortgages and car loans and small business loans. They just do it competently, and under the scrutiny of bank regulators and insurers. FTX was an unregulated crypto bank in the bahamas that did conceptually the same thing, just without any prudent risk management, due diligence or even reliable record keeping. But the customers were cool with that, because crypto and number go up.

> along with numerous communications about intentionally facilitating money laundering, sanctions evasions and a host of other securities law violations

He turned himself in, plead guilty and presumably provided law enforcement with a decade’s worth of easy convictions. I’m not convinced Zhao will be a pest on release. I’m not convinced SBF won’t be even half a century on.

> didn't really steal customer funds, he just did a negligently bad job of running the bank of crypto

No, he absolutely stole the money. Lending yourself money from the coffers is embezzling, full stop. It also seems clear he knew what he was doing was wrong, given the bizarre series of lies and obfuscation that he started making before being indicted and while on the stand.

> I’m not convinced Zhao will be a pest on release

He will, as long as he believes that he can do something without getting caught. He probably just decided that giving himself up and pleading guilty was the more rational choice the time and would allow him to get back to being a fulltime grifter much sooner

> When you put money into your checking account, the bank doesn't hold it in a vault, they re-lend it out as mortgages and car loans and small business loans. They just do it competently, and under the scrutiny of bank regulators and insurers.

A bank CEO can definitely not lend customers' money to themselves with fake assets (shitty tokens) as collateral, likely without intention to repay. SBF was a thief, full stop.

Would it make more sense to draw conclusions about criminal culpability from his trial, or from a dumb book written by a fawning admirer?

Let's split the difference and get ChatGPT to summarize them both.

Except they were an exchange not a “bank” who promised and contractually made out that customer funds were segregated and not re hypothecated. Both demonstrably false assertions that enabled significant fraud.

CZ got very lucky (by virtue of an excellent legal team) here, but that doesn't diminish Sam's faults.

> based on what was published in Michael Lewis' "Going Infinite”

No. You can’t posit anything about SBF based on this book.

My takeaway was that he was a lunatic, not particularly thoughtful and had an infinite risk tolerance

It seems unwise to based your opinion of SBF on “Going Infinite” especially given that the court case established he stole customer funds, not that he’s a silly boy who doesn’t know how to keep the books straight.

Given required capital rules, your bank deposit analogy is so wide of the mark it’s hard to know where to start but one thing a bank doesn’t do with customer funds is give them to a hedge fund which is allowed to run an almost infinite negative balance. If you own and run that hedge fund that isn’t poor record keeping or poor risk management it’s stealing customer funds.

If you’re going to bring the “unlicenced broker bro” message in Binance up it seems remiss not to mention that SBF and Caroline Ellison and others coordinated the transfers between FTX and Alameda in a Telegram chat group called “Wire Fraud”.

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