CZ Sentenced to Three Years in Prison, 161 Support Letters Help in Plea for Leniency
Note: On April 24th, the U.S. Department of Justice announced that Binance founder and former CEO Zhao Changpeng (CZ) should serve a three-year prison sentence (36 months). According to the reasons given, the U.S. Department of Justice lawyers believe that Zhao Changpeng helped Binance violate federal sanctions and money laundering laws, and stated that he must pay a higher price, so the sentence should be increased.
Prior to the trial, CZ wrote a letter to Judge Richard A. Jones, who was responsible for this case, apologizing for his “wrong decision” and admitting full responsibility for his actions.
In addition to CZ’s apology letter, there were also 161 support letters from his family, friends, and others, which portrayed the true CZ Zhao Changpeng from different perspectives.
CZ’s sister, former Morgan Stanley Managing Director Jessica Zhao, stated that although her brother made mistakes, he worked hard to help others in his life. She also mentioned the FTX incident and emphasized that CZ ensured that Binance never misused any customer funds. Zhao Changpeng’s children, Ryan and Rachel, who are currently attending university in the United States, hope that the judge should not define Zhao Changpeng’s character based solely on this incident.
Among them, the most special letter comes from He Yi, co-founder of Binance and also the mother of three children. In her letter, she wrote:
“If the cryptocurrency industry can be compared to the Wild West, then CZ is the guardian of this wilderness.”
“For CZ, regardless of poverty or wealth, he takes charity seriously and takes on social responsibility because he is kind and has a humanitarian spirit.”
Finally, He Yi stated, “Today, it is a sense of responsibility that made him choose to face the court trial, but he should never be regarded as the same as those evil murderers, robbers, and fraudsters. Sincerely, I hope Judge Jones can open God’s eye, have all-knowing wisdom, and make a fair judgment after seeing a more complete CZ.”
Full Text of He Yi’s Letter: What kind of person is the real Zhao Changpeng?
The following is the full text of He Yi’s letter:
Dear Judge Jones,
Thank you for taking the time to read this letter. I am Zhao Changpeng’s (CZ) business partner and also the mother of his three children. I hope this letter can help you understand a more real Zhao Changpeng.
In the spring of 2014, I met Zhao Changpeng, who we call CZ, at a blockchain public event at a school. Unlike many people who use anonymous aliases, CZ is the abbreviation of his real name. That day, CZ was invited to share spontaneously on stage as soon as he arrived because the organizers found out that he was working for the most popular bitcoin wallet at the time (blockchain.info). He passionately explained the blockchain technology and the principles of bitcoin to everyone. At that time, he had just sold his house to buy bitcoin, but due to the price drop of bitcoin, his assets shrunk significantly. However, this did not dampen his enthusiasm for blockchain technology. His speech was full of idealism about how blockchain technology can bring positive changes to the world, which greatly influenced and inspired me.
Later, CZ chose to enter the cryptocurrency field and founded Binance. Of course, he hoped that the company would succeed, but he was not someone whose ultimate goal was to make money. He genuinely wanted to use technology to drive progress in the world.
In the summer of 2014, CZ’s accumulated matching and trading technology background was not being utilized at Blockchain, so after my repeated invitations, he joined OKCoin, the cryptocurrency trading platform I was working for. At that time, the cryptocurrency industry had entered a downturn, and amidst the industry’s lamentation, a community member unfortunately suffered from leukemia and was unable to afford his own medical expenses. As a result, he publicly initiated a fundraising campaign. Despite his own assets being greatly reduced, CZ actively participated in the donation. Unfortunately, the community member still passed away in the end.
Inspired by this incident, CZ and I jointly launched the “Love BTC” charity project. He built a website and a public bitcoin wallet address. We conducted fundraising through social media, such as auctioning clothes, and then directly exchanged the BTC for goods to give to the beneficiaries.
For this, CZ also wrote a paper introducing how blockchain technology can achieve 100% transparent charity work, ensuring that the ultimate beneficiaries receive 100% of the proceeds and that no donations are eroded by intermediary management fees. This paper can be found on Github, with a timestamp of April 2014, and this is the predecessor of Binance Charity.
This was three years before Binance was established, and CZ was not wealthy at the time. Many people believe that charity is just a way to gain fame, a means of offsetting taxes, or that they will do charity when they achieve financial freedom. But for CZ, regardless of poverty or wealth, he takes charity seriously and takes on social responsibility because he is kind and has a humanitarian spirit.
In August 2017, which was my first month at Binance, a young user approached me and said that he had sent thousands of dollars to a Binance wallet address, but Binance did not support that token, so Binance could not receive the funds. This was a common mistake in the early days of the industry.
According to the industry’s practice at the time, you have to bear the consequences of your own mistakes. However, for this young person in his early 20s, those thousands of dollars may have been his family’s annual income or his annual university tuition, his future hope. After a brief discussion with CZ, he mobilized the already limited development resources and quickly helped the user recover the assets. This was the first case in the industry where a user was helped to recover assets sent to the wrong address.
With the first case, there have been countless more since then. Under CZ’s guidance, Binance has helped more than 180,000 users recover assets totaling over $441 million. This is a project that consumes a lot of resources and is not worth doing in terms of ROI, but we can ignite hope for our users in despair. Even today, on publicly listed trading platforms like Coinbase, they still do not support this service. In this emerging Wild West, many practitioners play the role of predators, but CZ has always insisted that we should do the right thing: protect the users.
In early 2018, when the price of bitcoin rose above $20,000, the enthusiasm of investors also gave rise to a lot of fraud. One day, a group of Chinese users approached me, pointing out that they were lured to invest in a project by an account on social media, and after sending the money, the person disappeared. However, according to the publicly available information on the blockchain, the funds had just been transferred to Binance. According to the enforcement process of most platforms today, users need to contact the police first, and the police provide a letter of assistance to freeze the funds. But at that time, cryptocurrency trading was prohibited in China, and the Chinese police did not handle such cases.
CZ said to us, “Do the right thing.” We temporarily froze the stolen funds, and then organized multiple phone calls between the victims and the fraudster. In the end, the fraudster returned the money to the users, and the fraudster closed the account. This is just one of the many examples of CZ’s insistence on combating wrongdoers. In the past year of 2023, Binance has cooperated with law enforcement agencies in various countries in over 58,000 investigations, many of which were actively initiated by Binance.Department opens investigation, which is why despite the mainstream media’s attempt to portray CZ as an evil villain, millions of community users and ordinary people see him as a hero of the industry, because CZ has always had his own insistence on justice. If the cryptocurrency industry is compared to the Wild West, then CZ is the guardian in this wilderness.
Starting in 2019, the company’s personnel began to grow rapidly, and the team composition became very globalized and diverse. During this period, there were Ivy League graduates from Wall Street, as well as dropouts from Europe, active NGO fighters from Africa, and young men from Southeast Asia who did not want to be fishermen in rural areas. It can be said that CZ truly treats everyone equally regardless of race, belief, gender, education, or family background. Whether it is a junior employee in Southeast Asia whose house was destroyed in a fire, or the Covid pandemic sweeping the world causing a shortage of epidemic prevention supplies for employees, or even the war between Russia and Ukraine bringing danger to employees, CZ spares no effort to help employees. For a company boss, it is not uncommon to spend millions of dollars to help those scarce talents in distress lead their families out of unstable living environments, and to continue to provide allowances. When making these decisions, CZ did not consider their backgrounds or positions, which also covered a large number of inexperienced junior employees who were generally easily replaceable. These employees can easily find alternative candidates, but CZ’s decision has only one reason: they need support.
CZ’s leadership style may not meet the traditional expectations of an excellent CEO. His commitment to transparency and fairness at Binance often clashes with the power expectations of a small group of employees accustomed to elite corporate environments. This has led to some employees leaving the company with resentment and making untrue accusations to the media. Although these reports sometimes make me feel frustrated, CZ has always shouldered this burden and continued to support justice and equality, because he understands that true fairness can sometimes be unfair to a few privileged individuals.
In November 2022, FTX faced a crisis, and CZ received the last plea for help from Sam (SBF). Without receiving any valid reports and documents provided by SBF, CZ convened a management meeting to decide whether to assist FTX.
He said, “We don’t need FTX as a company, we rescue FTX to save this industry, we should save FTX.”
Although ultimately forced to give up the deal, subsequent public information revealed that multiple companies associated with FTX had misappropriated user assets, which shocked CZ. CZ believes that transparency is a better solution, so he publicly released Binance’s trading platform wallet addresses and launched a product that allows users to independently verify the synchronization of their account funds and online wallet addresses, demonstrating Binance’s transparency, which further promotes industry self-discipline.
So far, CZ and I have experienced the ups and downs of this industry together for ten years. These ten years have been a decade of dramatic changes in the industry. During these ten years, Bitcoin has risen from a low of a few hundred dollars to over $40,000. We have seen countless celebrities fall from grace and numerous well-known institutions collapse in an instant. Most of the time, these people were self-proclaimed geniuses, talented but disregarding the law, thinking they could deceive the public or escape legal sanctions by luck. But CZ is different: he is upright, kind, sincere, intelligent, and very, very hardworking. Due to work reasons, CZ underwent two spinal surgeries in 2020 alone, and he did not stop working for a single day even during the 18 months of lying repeatedly in bed.
As the CEO and largest shareholder for the past six years, CZ has been paid a salary lower than that of subsequent senior executives introduced by the company and has not received any dividends or cashed out. This time, in order to keep Binance operational, he chose to fly to the United States to plead guilty. Between personal interests and public interests, CZ always chooses to sacrifice himself to build Binance, and when it comes to Binance and users, he chooses the users.
As CZ’s partner, I understand how CZ has earned the respect of the community; it may be when the Chinese government banned Bitcoin trading platforms, and other project parties took advantage of the situation to make a profit, CZ chose to refund users at a higher price. It may also be when Binance was hacked, and CZ immediately disclosed information and took full responsibility. It is even more likely that when countless project parties issued coins just to become rich, CZ helped users track scammers and hackers in the industry, some of which were not related to Binance at all, but because of his sense of mission and responsibility to the industry.
As CZ’s life partner, I have known CZ for nearly ten years, so I know his unknown side better. He knows nothing about the jewelry, luxury goods, luxury cars, and art auctions that rich people are enthusiastic about. He lives a simple life. He buys affordable clothes from Amazon, rides a balance bike to meetings, and enthusiastically shows reporters his Toyota 6-seater station wagon, which was later publicly ridiculed by reporters. He buys things for efficiency and interest, without fanatical desires for money, fame, or enjoyment. He wants to live a meaningful life.
At the same time, he always tries to take care of his friends’ feelings as much as possible, regardless of their occupation or social status. He also tries his best to maintain high-quality interactions with his three young children amidst busy work. The children are close to him, and now they always ask, “Daddy, why aren’t you home? When can Daddy come back?”
Of course, I am not saying that CZ has not made mistakes, but his biggest mistake is ignorance.
As a startup company without a glamorous background, the founding team members have no legal background, and even most of the early management team members, including myself, cannot read English. In the absence of experience and legal knowledge, CZ has won users with fairness, integrity, and a sense of responsibility to the industry, but he has also made mistakes.
Nevertheless, the mistakes have been made, and both Binance and CZ have paid a huge price.
CZ has said before, “No one wants to be a hero because no one is born wanting to be in the front line taking arrows. Heroes are just in that position where they have to protect their families, communities, ethnic groups, and territories and do the right thing, and they have to become heroes in the process.”
