Binance’s settlement aftermath CZ’s court statement and sentence prediction. Full text of internal letter. He Yi’s response and the interpretation of future direction by the outside world.

Untangling Binance's Legal Battle CZ's Court Statement, Sentence Prediction and the Full Text of the Internal Letter. He Yi's Reaction and the Outside World's Speculation on Future Direction.

Author | Editor in Chief

Binance CEO Changpeng Zhao (second from the left) leaving the federal court in Seattle on Tuesday afternoon Eastern Time.

According to Bloomberg, Judge Brian Tsuchida ruled that CZ will be released and allowed to freely travel to his home in the United Arab Emirates while awaiting sentencing. The bail amount for CZ is set at $175 million, and his lawyers previously stated that he is prepared to pay this amount to secure his release and will appeal the terms of his release. As part of the release, CZ’s sister has also built a house worth over $5 million in California.

• As Crypto Craze Continues, BlackRock Rolls the Dice with SEC for Bitcoin ETF Insider Insights Revealed!
• Genesis Global Capital Files Lawsuit Against Gemini for $689 Million Recovery
• The Bitcoin ETF Token Rug-Pull: A Lesson in Deception

CZ faces a maximum of 10 years in prison, but under the plea agreement, the expected sentence is not to exceed 18 months, and the U.S. Department of Justice has yet to decide on his imprisonment. Defense lawyers stated in court that sentencing will be postponed for 6 months.

CZ has been released on a $175 million personal bond. The sentencing hearing is scheduled for 9:00 a.m. Pacific Time on February 23, 2024. The terms of his release allow CZ to leave the United States, but he must return within 14 days prior to the sentencing.

During his court appearance, CZ said, “I wanted to resolve this issue. So I wanted to take responsibility and end this chapter of my life. It’s a very simple mindset for me. I’ve never been in trouble before. I’ve never been a criminal. I’ve never been to court. I was a little bit scared coming here. I was granted citizenship in the United Arab Emirates. But I do not want to exploit that. The judge mentioned that CZ did not have an obligation to come to the United States, but he did so, indicating that CZ wanted to resolve this issue.”

https://twitter.com/BitMEXResearch/status/1727110917999980757?t=_wxOBZGk5evvok5lEW23Ew&s=19

Caroline Pham, a commissioner at the U.S. Commodity Futures Trading Commission (CFTC), stated that in addition to fines for Binance and CZ, if the proposed settlement is approved by a federal judge, former Binance Chief Compliance Officer Samuel Lim will also pay a $1.5 million fine and be prohibited from serving as an unregistered futures broker or operating any illegal cryptocurrency derivative platform. The SEC has previously pursued compliance personnel, but this is the first time the CFTC has held a compliance executive personally accountable, and it claims that the facts alleged involving egregious personal misconduct demonstrate that the defendants’ employees were only nominally in compliance.

The US Department of Justice press release stated that Binance did not disclose improper conduct in a timely and voluntary manner, but it has received some praise for cooperating with the investigation and taking steps to correct its compliance plan. Binance delayed providing relevant evidence, including recorded meetings of Binance executives discussing US legal requirements. As a result, the total amount of criminal penalties was reduced by 20% compared to the lower limit of the fine range under the applicable US sentencing guidelines.

On that day, CZ released an internal memo to Binance security personnel, which said:

Thank you all for your warm, caring, and touching words, but more importantly, for keeping this ship soaring. With so much news coming in now, I’m unable to respond to each one individually, so I’ll say it here.

For me, this has certainly been a challenging day, going through this unfamiliar process with a complete (12-hour) time difference and not being able to use my phone for most of the day in court.

I wrote this tweet in advance at 4 am. With all the other lengthy legal documents that I had to review, I really didn’t have time to write a pre-emptive internal memo. I think our communications team did a great job. I won’t repeat what has already been said.

I just want to say that I’m proud of the work you’ve done today, in the past, and for the future.

Binance will be fine. I will have to endure some pain, but I will get through it. Although there will be some changes in our structure, we will weather the storm. Looking back in a few years, this may not be a bad thing. In any case, I need to take a break now. I understand that you all need to continue working hard and not complain that I’m slacking.

To lighten the mood a bit, this famous phrase/clip from “Star Trek” (2009) comes to mind. “I need everyone to continue to do a great job.” If you haven’t seen it, it’s a good movie.

https://getyarn.io/yarn-clip/2b35b7af-ca1c-48e6-85ff-0b65b2d8ffff

Please help Richard transition into his new role. We’ll meet at the conference, where I’ll say a few words and then hand it over to Richard.

Newly appointed Binance CEO Richard Teng responded to the $4.3 billion fine, stating that our business fundamentals are very strong. Binance continues to be the world’s largest cryptocurrency exchange by trading volume, and our capital structure is debt-free, expenses are moderate, and despite charging low fees to users, we have substantial revenue and profits.

Earlier, Coinbase executive Conor Grogan stated that, according to Binance Corporate’s Proof of Reserves (PoR) data, their cryptocurrency holdings amount to $6.35 billion, including $3.19 billion in stablecoins, excluding offline cash balances and funds not in the PoR wallets. Binance is highly likely to fully pay the $4.3 billion fine without selling any cryptocurrency assets.

Matrixport analyst Markus Thielen said that with CZ stepping down, as well as the fine amount being lower than the previously anticipated $10 billion, Binance is likely to remain one of the top three exchanges in the next 2-3 years. More exchanges will strengthen their compliance plans and become part of the monitoring sharing protocol, which will help in the approval of Bitcoin ETF in the US. Bitcoin.

JPMorgan analysts stated that we believe the prospect of a settlement is positive because the uncertainty surrounding Binance itself will fade away. The prospect of a settlement will eliminate potential systemic risks assumed from a hypothetical collapse of Binance for cryptocurrency investors.

He Yi, the co-founder of Binance, said in a WeChat group, “Our early compliance was not good enough, and we have to face the consequences when we make mistakes. Binance did not touch user funds or manipulate the market. Good compliance makes us a good kid. It’s not just about Binance; first, there was BitMEX, and now it’s Binance. One after another. Now we have a compliant Binance, opening a new chapter.”

We will continue to update Blocking; if you have any questions or suggestions, please contact us!