BitMEX founder Arthur Hayes has argued that Binance and its former CEO Changpeng "CZ" Zhao were singled out for “absurd” punishment at the hands of the U.S. legal system.

In a lengthy blog post, Hayes claimed that, “the treatment of CZ and Binance is absurd,” arguing that it “highlights the arbitrary nature of punishment at the hands of the state.”

The $4.3 billion fine levied against the exchange was, Hayes said, disproportionately harsh compared to the treatment of “Too Big to Fail bank CEOs” responsible for the 2007-2008 financial crisis. “They got a free pass because to prosecute them would threaten the banking system,” he added.

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Hayes further suggested that CZ’s meteoric ascent from a “nobody” to “one of the richest humans on earth in less than a decade,” at the head of a crypto exchange, represented a challenge to the “financial and political establishment,” through disintermediating institutions and handing control over to individuals who are not “members of their class.”

Zhao stepped down as CEO of Binance earlier this month after pleading guilty to anti-money laundering violations, with the exchange paying $4.3 billion to settle AML and sanctions violations and agreeing to exit the U.S. market entirely.

As part of a personal plea deal, Zhao put up $15 million and had guarantors offer $5 million in collateral for a $175 million bond. He faces up to 10 years in prison and must pay a $50 million fine. Yesterday, a judge ruled that Zhao must remain in the U.S. pending his sentencing in February 2024.

According to the U.S. Department of Justice, Zhao “turned a blind eye to its legal obligations in the pursuit of profit," serving U.S. users without proper controls and enabling funds tied to crimes including hacking and terrorism to flow through the exchange. Binance also failed to stop over $898 million in illegal trades between U.S. users and residents in sanctioned countries including Iran, the DOJ claimed.

Hayes stepped down as CEO of BitMEX in 2020 after the CFTC charged the exchange with money laundering and operating illegally in the U.S., and the U.S. Attorney for the District of New York charged Hayes with violating the Bank Secrecy Act.

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In February 2022 Hayes pled guilty to violating the Bank Secrecy Act, paying a $10 million fine. Hayes was also sentenced to six months of house arrest and two years’ probation.

Edited by Stacy Elliott.

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