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Welcome back, everyone. 
I am Cass PNC. 

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I'm joined as usual, by my 
partner in crime, Mr. Bennett 

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Tomlin. 
How are you today? 

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I'm. 
Doing well. 

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How are you, Cass? 
I'm doing good. 

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Today, Bennett and I are talking
about CZ, who was the CEO and 

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founder of Binance, the most 
liquid and volumous 

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cryptocurrency exchange in the 
world. 

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I think still. 
Right, yes, by far. 

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Which is kind of crazy because 
because of the things we're 

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going to talk about today, but 
the difference between what 

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happened to him, he just got 
tried and sentenced for what he 

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did at finance. 
So we're going to talk about 

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that, and we're going to talk 
about the difference between 

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that and what happened to SPF 
and what SPF was guilty of and 

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why he ended up getting a much 
longer sentence. 

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SPF, of course, being Sam 
Bankman Freed, who was the CEO 

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and founder of another 
cryptocurrency exchange, FX, and

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a trading firm called Alameda 
Research. 

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But yeah, sorry for the long 
winded explanation there, but 

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Bennett, do you want to just 
kind of describe what happened 

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to CZ, what he is guilty of? 
CZ was actually not tried. 

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He pleaded guilty to violations 
of the Bank Secrecy Act and was 

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sentenced to four months in 
prison. 

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And for some people, this has 
been a jarring comparison to the

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recent trial, conviction and 
sentencing of Sam Beckman Freed.

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For those who missed our many 
previous episodes on the topic, 

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Sam Bankman Freed was convicted 
of seven felony accounts, 

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including wire fraud, conspiracy
to commit a variety of different

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types of fraud, securities 
fraud, commodities fraud. 

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Oh, just about any kind of fraud
he could get his hands on. 

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And Sam Bankman Freed was 
sentenced to 25 years in prison,

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which is 75 times more than four
months. 

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And some people don't feel that 
there's a 75 fold difference in 

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what these two people were 
doing. 

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That's kind of what we're 
looking at today. 

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What led to this drastic 
difference between these two 

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criminals and the time they'll 
spend repaying their debt to 

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society? 
I think it's worth pointing out 

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as far as we know I don't 
there's no confirmation of this 

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but as far as we know especially
considering that Sambank and 

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Freed is still putting in 
appeals and trying to alter his 

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sentence and yeah he's 
desperately trying to get out of

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of of what has happened. 
Now I think it's worth pointing 

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out that anything is possible 
we're seeing that with like 

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Harvey Weinstein right now 
unfortunately you never know 

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when an an appeal as unlikely as
it may seem is going to work. 

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So we don't know what will 
happen with Sam Bank and creed. 

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What we what we can say for sure
is that he was sentenced to 25 

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years. 
He had already done over a year 

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in prison by the time he was 
sentenced to that. 

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So that time is counted or time 
in jail. 

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Sorry. 
So that time is counted. 

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We also believe that he will be 
eligible for a program that will

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get him likely if he behaves 
himself in federal prison out 

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after serving roughly 50% of his
sentence though something like 

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11-12 years. 
Which is still a long time, 

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especially if you spend a lot of
it at MDC because you're 

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desperately appealing. 
Sure. 

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I yeah that I mean that's yes, 
that's wild. 

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But I will say that it is a very
long time. 

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I do understand why people would
prefer if there was kind of an 

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exemption considering how many 
people he hurt because SPF 

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through his malfeasance did did 
hurt a lot of people. 

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Can you just let's let's talk 
about that? 

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Because that that that's really 
at the heart of why he was given

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such a strong sentence along 
with his lack of remorse and 

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cooperation. 
So let's discuss all of that. 

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Yeah, And I think this this gets
at the bulk of why their 

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sentences are so different. 
And we'll get into the 

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cooperation and general ability 
to handle a crisis, which also 

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contributed. 
But like Sam Bankman, Freed 

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embezzled somewhere in the range
from 8 to $11 billion in assets 

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from FTX, leaving it massively 
insolvent and therefore meaning 

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that like, the entire thing just
collapsed. 

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As far as we know, Binance never
had an 8 to $11 billion hole in 

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its books, and none of the 
criminal charges brought against

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Chang pens out are about having 
a hole in the books. 

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They're primarily about 
Binance's deliberate choice to 

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not maintain a compliance 
program in order to increase 

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their volume and things like 
that. 

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Having said that, I do want to 
note that we've discussed on 

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here before that finance 
accounting has problems. 

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That suggests at times they may 
have been double counting 

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certain assets and other things 
that suggest there may have been

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some problems, but they were 
never on the scale of 8 to 11 

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billion and they never caused 
the exchange to shut down 

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withdrawals and collapse into 
bankruptcy. 

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And that's the real kicker here,
right? 

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Is that regardless of whatever 
else CZ was doing, finance did 

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not collapse into a messy 
bankruptcy, hurting like, tons 

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and tons of people. 
And now I want to get into 

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something because because yes, 
that's all of that is, as far as

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we know that's accurate. 
I mean, we have no, we have no. 

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Like you said, we don't know 
what the books actually look 

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like for Binance. 
Very few people would, but. 

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I think even the CFO, if you 
remember one episode when I was 

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out visiting you. 
Yeah, exactly. 

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And and this is kind of what I, 
I, I was hoping we could bring 

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up is this idea that we've been 
talking about Binance and the 

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problems and the solution like 
the solutions and all of this 

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going on for over a year now. 
This is not new that that CZ and

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Binance were under investigation
and in trouble A A big 

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difference here though is they 
apparently, as far as we can 

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tell, immediately cooperated 
with the government and opened 

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up the cryptocurrency exchange 
to the feds. 

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For lack of a better way of 
phrasing this. 

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And you know, I like you don't 
have to take my word for it. 

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Look at the agreements that have
been made. 

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Yes, I think you're exactly 
right. 

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And like the other thing that 
just keeps running through my 

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head, like in the lead up to the
sentencing and after the 

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sentencing has been comparisons 
to Arthur Hayes. 

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For those who don't remember, 
Arthur Hayes was the founder and

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once the chief executive officer
of Bit Max, an offshore 

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cryptocurrency exchange that 
allowed people to make massive 

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leverage bets on Bitcoin. 
Eventually Arthur Hayes became 

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worried, convinced that there 
was potential criminal charges 

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waiting in the wings for him. 
Hired a top flight law firm to 

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start dealing with some of those
consequences, placed himself in 

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a non extradition location while
they were working on whatever 

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they could work, and then 
eventually surrendered at a time

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basically of his choosing to. 
The feds pleaded to I think 1 

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count of violating the Bank 
Secrecy Act and his sentencing 

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was, I think just house arrest 
for Arthur Hayes after that 

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negotiation. 
And Chang Penzo apparently saw 

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Arthur Hayes do that and was 
like, oh that's the trick. 

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That's what I'm going to have to
do. 

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And so back in 2022, ish 2021 
ish, when the regulatory and law

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enforcement pressure on finance 
started stepping up, finance did

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a few things. 
They started hiring like Tigran 

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Gambrayan from the IRS and a 
bunch of other people to lead 

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like their new unit that was 
going to be cooperating with 

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authorities around the world to 
make finance useful for them. 

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And Chang Penzo himself hired 
Kendall Day, the former head of 

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the Department of Justice's 
money laundering at an asset 

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recovery service to start 
negotiating on his behalf in 

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Washington. 
So finance starts cooperating as

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fully as possible. 
Chang Penzo hires arguably the 

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best possible lawyer for this 
type of thing to start 

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negotiating on his BF and places
himself in a non extradition 

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country until the deal's been 
negotiated and he's ready to 

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surrender. 
And this is just such a strong 

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contrast to Sam Bankman. 
Freed, when he realized there 

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was a problem, went running in. 
Not to the feds, not to lawyers,

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not to accountants, but to Chang
Pen Zhao, and then collapsed 

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into bankruptcy. 
And then just started loudly and

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publicly protesting his 
innocence, which CZ has been 

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very, very careful in regards to
his public relations ever since 

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then. 
At CZ was always less obnoxious 

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than Sam Bankman, Freed and 
this. 

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Continued like even through 
their literal sentencing. 

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Sam Bankman freed his letter to 
the judge before his sentencing.

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Half of it is Macklemore lyrics.
Part of it he describes how much

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he's going to miss having sex. 
Like the entire thing is a mess 

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in which he never, like, 
actually expresses regret or 

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sorrow. 
And Chang pans out. 

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When he was in court for his 
sentencing was like, I'm sorry 

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for what I did. 
In the harms I've caused. 

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I take responsibility. 
I was the CEO, and this is all 

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my responsibility. 
And so even at the end, even 

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when, like the hands were 
basically dealt, the chips were 

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going to land where they were, 
there was still such a striking 

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difference between how these two
adult cryptocurrency executives 

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faced the music as it was 
coming. 

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And part of that might come to 
the difference in the music. 

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Chang Pen Zhao knew he was very 
unlikely to get over 18 months, 

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as we've talked about before. 
But like it, it's still striking

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to see that repeated to the very
bitter end. 

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I think it really tells you a 
lot about both of these 

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individuals as well. 
Where you have Sam Bankman, 

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Freed, who seems to always think
he knows what's best, regardless

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of the experts around him, And 
then CZ, who is doing everything

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to shut his mouth and hire 
people who he knows understand 

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everything better than he does 
and he's just there to listen. 

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And like the other take away is 
following Chang Penzo's pattern,

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following Arthur Hayes pattern. 
Here you can get away with a lot

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if you cooperate and play it 
well, right? 

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Like Binance was the what 
largest or second largest 

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counterparty for Hydra. 
They were transacting with some 

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of these sanctioned Iranian 
entities and things like that. 

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Like there was a lot of 
seriously questionable 

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transactions, like problematic 
bookkeeping, wash trading, and 

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arguably market manipulation, 
conflicted transactions between 

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trading firms and exchange. 
There's a lot to still dig into 

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in the Binance story, but like 
fundamentally because he saw 

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that there was the power of the 
state coming towards him, most 

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of that never came out I. 
Think it's worth pointing out 

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that they also paid. 
Tell me if I'm wrong here, but I

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believe finance paid the largest
fine in in history, $4 billion, 

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if not the largest one of the 
largest settlements in history, 

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$4 billion, which I guess 
they're able to pay without 

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touching customer deposits and 
all of that stuff because they 

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also have court appointed people
within the inside of Binance, 

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essentially ensuring that 
everything is as they claim it 

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is. 
Well, and you talked about that 

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$4 billion fine. 
And like we've complained about 

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the HSBC case on this podcast 
before, and this was double the 

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monetary amount of that case, 
right. 

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And so if you're living in a 
world, which unfortunately we 

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are, where cases like the HSBC 
case are how the system works, 

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regrettably, then Binance 
finance's case stops seeming 

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like the whiff it sometimes 
feels like, because they 

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literally got a fine double the 
size of HSBC, this massive bank,

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right? 
I definitely understand the 

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disappointment in the concept of
of finding any of these entities

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at all, right? 
I I I totally understand that 

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sentiment. 
I get it. 

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If you're going to have these 
laws in place about, you know, 

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helping terrorists get funded 
where I would expect the US 

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government would come down 
incredibly hard on a singular 

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individual who is guilty of any 
of this stuff but didn't come 

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down as hard on the entity of 
finance and the individual of 

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CZI get the frustration with 
that. 

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I do want to point out, you and 
I were discussing this, that 

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that those funds don't go 
directly to the SEC. 

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Those those funds don't go 
directly to the Department of 

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Justice. 
Those funds are given to the the

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general fund. 
Those are general fund funds. 

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They go back to the Treasury. 
Like ultimately it looks great 

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for them when they go ask for 
their budget next year in front 

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of Congress. 
But it is not strictly speaking 

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like oh, they're getting a 
payoff, They're getting this big

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fine, it's all going straight to
them. 

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That's why they're accepting it.
That is not how it works. 

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I want to make sure people are 
are cognizant of that. 

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00:13:00,920 --> 00:13:02,920
I still get the frustration, 
however. 

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00:13:02,960 --> 00:13:05,760
We don't have to like it. 
We don't have to agree with it. 

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In fact, I think probably it's 
not just no coiners. 

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I'm sure there's a lot of 
coiners out there who really 

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didn't appreciate the way that 
CZ did business either. 

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You don't have to like the guy 
to understand why the US 

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government is doing what it's 
doing and making the deals that 

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seem like sweetheart deals. 
I do get the idea that if you're

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able to get within the business 
structure of the largest 

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cryptocurrency exchange in the 
world, how that can pay off in 

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other ways, I guess. 
And I think what you just 

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mentioned there with the monitor
is like a significant motivator 

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for government investigators. 
We've talked before about like 

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how the Alphabet seizure led to 
like eventually all the Hydra 

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00:13:43,880 --> 00:13:47,880
convictions, Roswell, Khan and 
Dutch's cases. 

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00:13:47,880 --> 00:13:50,520
All this stuff came because the 
government got access to this 

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00:13:51,040 --> 00:13:54,720
relatively small compared to 
something like finance site that

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helped them piece together a 
bunch of the other actors in the

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ecosystem. 
And the number of actors in the 

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ecosystem who have 0 interaction
with Binance is very, very 

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small. 
And so having this additional 

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level of insight was definitely,
in my opinion, a motivator for 

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government investigators. 
I totally agree with that. 

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00:14:14,920 --> 00:14:17,400
I don't think either of us 
necessarily approves of the way 

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00:14:17,400 --> 00:14:21,280
these things go or I. 
We're certainly not cheerleaders

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00:14:21,280 --> 00:14:25,040
for CZ or Binance. 
I mean, I think it's incredible 

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00:14:25,040 --> 00:14:29,760
that B&B hasn't gotten them in 
huge trouble from a long. 

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00:14:29,760 --> 00:14:32,400
Time the SEC case is still going
on. 

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00:14:32,720 --> 00:14:34,680
Well, we'll see what happens 
with that. 

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00:14:34,920 --> 00:14:37,240
You know the SEC, they always go
for the throat. 

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00:14:37,360 --> 00:14:39,440
Gosh, we'll have to do an 
episode about that. 

258
00:14:39,440 --> 00:14:42,640
Just seeing I it's pretty, it's 
been pretty interesting to see 

259
00:14:42,640 --> 00:14:46,440
how people are getting really 
upset that the SEC are sending 

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00:14:46,440 --> 00:14:48,160
out a bunch of Wells notices 
now. 

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00:14:48,160 --> 00:14:51,360
You should like and subscribe 
otherwise the price of cast coin

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00:14:51,360 --> 00:14:52,680
is just going to keep going 
down. 

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00:14:53,240 --> 00:14:55,200
I don't know. 
I don't know what else to tell 

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00:14:55,200 --> 00:14:58,440
you guys. 
Merritt Pete Can't keep buying 

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00:14:58,440 --> 00:15:01,480
cast coin at these prices. 
You got to stop them.

