Coindesk Logo

U.S. Treatment of CZ, Binance Is 'Absurd:' Arthur Hayes

U.S. Treatment of CZ, Binance Is 'Absurd:' Arthur Hayes

U.S. Treatment of CZ, Binance Is 'Absurd:' Arthur Hayes

The former BitMEX CEO said the record-breaking penalties imposed on Binance represent an institutional bias against the transformative impact of cryptocurrency and blockchain technology.

The former BitMEX CEO said the record-breaking penalties imposed on Binance represent an institutional bias against the transformative impact of cryptocurrency and blockchain technology.

The former BitMEX CEO said the record-breaking penalties imposed on Binance represent an institutional bias against the transformative impact of cryptocurrency and blockchain technology.

AccessTimeIconNov 28, 2023, 9:16 AM
Updated Mar 8, 2024, 5:41 PM
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

Binance and its founder Changpeng "CZ" Zhao have been treated the way they have been in the U.S. because the crypto exchange – and other centralized exchanges – represent a threat to the traditional American-led global financial system, former BitMEX CEO Arthur Hayes argues in a new essay posted on his Substack account.

Last week, Binance and its founder were criminally charged for violating sanctions and money-transmitting laws, agreeing to pay $4.3 billion in fines and prompting Zhao to step down as CEO. Zhao was determined by a court to be a flight risk and must remain in the U.S. until his sentencing early next year.

Compared with penalties given out to large traditional financial institutions, those handed out to Binance and CZ are "absurd" and highlight "the arbitrary nature of punishment at the hands of the state," Hayes wrote.

"Did Former Goldman Sachs CEO Lloyd Blankfein get the same treatment as GS under his reign helped Former Malaysian Prime Minister Najib Razak and financier Jho Loh steal more than $10 billion," Hayes wrote, referring to the 1Malaysia Development Bhd. (1MDB) scandal that was uncovered in 2015. Goldman Sachs ended up being fined $2.9 billion in 2020.

"No, Lloyd got to retire with his stock options intact, and GS was not deemed criminally responsible," he continued, also pointing out that CEOs of major banks weren't prosecuted for the 2008 financial crisis.

Hayes argues that the treatment of CZ and Binance is indicative of resistance against decentralization and the blockchain revolution, which, he said, directly challenge state power.

"The state powers centralization, and collaboration is achieved through threats of violence," he wrote. "A problem for the financial and political establishment was that the intermediaries facilitating flows into and out of the industrial revolution named blockchain were not run by members of their class."

Hayes himself is no stranger to state prosecution. In February 2022, he pleaded guilty to violating the Bank Secrecy Act because he willfully failed to implement an anti-money laundering (AML) program at the exchange. Later that year, he was sentenced to two years of probation.

Edited by Sheldon Reback.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.