CZ and Binance were once famous for always getting away from scrutiny but alas, the founder was finally sentenced.
CZ was recently sentenced to 4 months in prison despite the 36-month recommendation of persecutors. The founder whose family once left China for Vancouver says he intends to do his time before moving on to a new chapter of his life.
His lawyer is arguing that CZ is a non-US citizen and is ineligible for a minimum security facility and requests he goes to SeaTac prison Washington.
Notable battles:
1. Zhao vs. Sequoia Capital
In 2017, Sequoia Capital improperly issued an ex parte injunction against Changpeng Zhao, per HK High Court ruling. Sequoia gained a temporary injunction to prevent Zhao from negotiating with other firms. Later in 2022, it was reported that Binance became one of 18 co-investors in Elon Musk’s Twitter acquisition alongside Sequoia Capital Fund.
2. Hacker Bounty
Binance offered $250,000 BNB to find hackers and scammers, which also led to its 2021 Bug Bounty Fund worth $10m in crypto. In 2022, a Binance bug crediting MOBILE tokens on the Helium blockchain instead of HNT tokens led to users exploiting the bug, one of them even gained $20m in HNT tokens.
3. Binance vs. NY Attorney General
The New York AG’s office said there were three exchanges illegally operating in NY, naming Binance along with Kraken and Gate.io. CZ then went on Laura Shin’s podcast, declining Shin’s invitation to enter the US.
4. 7,000 BTC Binance Hack
In 2019, a Binance security breach led to 7,000 BTC stolen from hot wallets worth around $41m and $213.7m on Oct 2023. The company said it would cover losses with its SAFU fund, which was established in July 2018 and in Jan 2022 was worth $1bn.
5. Alleged Sale of Unregistered Securities
In April 2020, Binance, CZ, and other senior officials were sued for alleged sales of unregistered securities. Ultimately, a US District Judge dismissed the class action and on a podcast two months later, CZ still refused to give the exact Binance headquarters location.
6. CZ vs. Forbes
Forbes issued the “Tai Chi” documents in 2020, allegedly leaking CZ and Binance attempts to dodge regulations. CZ sued Forbes and two journalists over defamation and in 2021, they voluntarily dismissed the lawsuit.
7. Binance vs. US Justice Department and IRS
In May 2021, the US Justice Department and IRS were investigating Binance for possible tax evasion or money laundering, per Bloomberg. During this time, CZ shared that he had a new home in Dubai.
8. CoinMarketCap HEX Manipulation Allegations
In Sept 2021, Ryan Cox sued CoinMarketCap, owned by Binance, and accused it of manipulating HEX prices. A civil class action was filed against CoinMarketCap, Binance, and CZ but was later dismissed.
9. SEC Probes Binance for Sigma Chain AG
The SEC probed Binance in Feb 2022 over affiliations with Sigma Chain AG and Merit Peak Ltd. The lawsuit alleged that Zhao was a beneficial owner of Merit’s Peak and that they disregarded federal security laws. In 2021, Binance US moved over $400m from Silverbank to Merit Peak Ltd.
10. CFTC Sues Binance and CZ
On March 2023, the CFTC sued Binance and CZ alledging willful evasion of US law and breaching derivatives rules. There were also money laundering operations accusations.
11. SEC Files 13 Charges Against Binance and CZ
The SEC filed 13 charges against Binance and CZ including operating unregistered exchanges, misrepresenting trading controls, unregistered securities offerings, and misleading investors among others.
CZ has also faced international scrutiny, but that’s a story for another time. The founder says he wants serve his sentence, focus on education, and remain a passive investor in crypto.
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