Did Binance ex-chief CZ really come to the US voluntarily?
On November 21, 2023, Binance founder Changpeng Zhao (CZ) traveled to the US to plead guilty to federal crimes. Countless media stories published an assumption that he voluntarily surrendered to authorities in Seattle. However, new facts about France, its Financial Action Task Force (FATF), and a last-minute plea is casting doubt on CZ’s self-described cooperative behavior.
A globe-trotting billionaire, CZ has stayed in several countries that do not honor US extradition requests, including China, Bahrain, and the UAE. For years, he has repeatedly declined invitations from family, friends, and crypto celebrities to attend events within the US or Canada. His deflections about geolocating himself or committing to speaking in-person at any US conference became standard fare during media interviews.
In short, it was common knowledge that CZ has long avoided the US. Now, with the benefit of hindsight, his travel choices made perfect sense.
For years, the Commodities Futures Trading Commission (CFTC), Department of Justice, and other regulators were quietly investigating Binance and CZ. Their enforcement efforts recently culminated in a record-setting $4.3 billion fine and multi-count criminal settlement.
CZ will likely go to prison this year. A federal judge is scheduled to sentence him next month.
Why CZ’s visit to Seattle might not have been entirely voluntary
Despite countless articles proclaiming CZ voluntarily went to the US, there are reasons to doubt this characterization.
Firstly, CZ would have had to enter the US three months later, anyway — to attend his sentencing. Whether CZ had entered the US voluntarily in November or waited until February, the ultimate outcome is that he must attend his criminal sentencing in-person.
Therefore, the maximum period of time that could possibly be characterized as CZ voluntarily staying in the US is the three months from late-November through February’s sentencing hearing.
However, these three months of ‘cooperation’ might be highly motivated by other, less voluntary, regulatory proceedings. French law enforcement were actively probing whether Binance advertised financial services before obtaining regulatory approval. Unlike its non-cooperation with the US, the UAE has a treaty stipulating “judicial cooperation” with France. UAE authorities might have extradited CZ if French authorities ever chose to pursue criminal charges against him.
CZ had courted French officials, even having dinner with French President Macron. Despite some initial praise from Finance Minister Bruno Le Maire, French parliament members like Aurore Lalucq were critical of Binance’s registration due to its worrisome investigations worldwide.
Read more: Scoop: European states working with SEC on Binance investigation
Binance also has plenty of problems elsewhere in Europe. For example, the Financial Conduct Authority (FCA) denied it permission to operate in the UK due to its notorious lack of regulatory compliance. The Netherlands’ central bank fined Binance for offering digital assets without a license, saying that avoiding levies gave it an unfair competitive advantage.
FATF negotiations with Dubai
Just months ago, CZ was living in Dubai and considered moving Binance’s global headquarters to the UAE. The government granted him enviable Emirati citizenship. CZ might have enjoyed the non-extradition status of UAE had he not traveled to Seattle in November — but it may not have lasted long.
The FATF added UAE to its “grey list” of countries with lax anti-money laundering and anti-finance terrorism controls in early 2022. In response, UAE had been negotiating with FATF to be removed from that list. FATF had mentioned Binance as an area of particular money-laundering and financing of terrorism concerns. Binance has held a dismissive attitude toward terrorism financing, which included making excuses for its seeming inability to stop those activities. Binance allowed groups like Hamas to receive stablecoin donations through Binance accounts.
The FATF has especially reported on the UAE’s efforts to improve its effectiveness to combat money laundering and terrorist financing. It noted the nation’s improvements on a few line items in its list of 40 recommendations.
Changpeng Zhao’s willingness to take a plea deal in the US could have been a dodge of consequences elsewhere.
Maybe CZ didn’t voluntarily arrive after all
Whether CZ’s trip to the US in November was voluntary is highly debatable. First, he would have had to enter the US three months later for sentencing involuntarily. Second, France was in advanced stages of regulatory probes into Binance — and unlike the US, France does have an extradition policy with CZ’s home country, UAE.
Finally, FATF had brought up Binance to UAE officials as particularly concerning; and UAE officials were negotiating steps to remove the country’s FATF Grey List designation. Perhaps bringing Binance into compliance — and CZ to justice — might have been part of UAE’s demonstration of its commitment to FATF.
In any case, CZ is in the US now. He has desperately tried to gain permission to leave the US for even a few weeks to no avail.
Read more: A complete timeline of Binance and CZ’s tumultuous 2023
Days after his guilty plea in November, he requested leave for travel to Dubai, which a Seattle judge quickly denied. In December, he bid again for permission to travel for a scheduled family member’s surgery in the UAE while he awaited trial.
He even offered to pledge all of his Binance US equity as surety for his return in February. He comically claimed it was worth $4.5 billion as of several years ago. (Nowadays, Binance US has collapsed in value, intermittently processes USD withdrawals, and is the defendant in a sweeping SEC lawsuit). However, that bid was similarly rejected by a US federal judge.
Only a few more weeks remain until CZ is sentenced for committing federal crimes.
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