Arthur Hayes Calls U.S. Treatment of Binance and CZ 'Absurd'

• Binance and its Founder Face Legal Challenges in the U.S.
• Legal Charges and Fines
• Comparison with Traditional Financial Institutions
• Cases in Point: Goldman Sachs
• Implications for Decentralization and the Blockchain Revolution
• Hayes' Own Legal Troubles

Binance and its Founder Face Legal Challenges in the U.S.

Renowned crypto exchange, Binance, and its founder Changpeng CZ Zhao, have recently experienced legal difficulties in the United States. The adversity arises from the perceived threat these exchanges pose to the traditional American-led global financial system, as suggested by Arthur Hayes, former BitMEX CEO, in a recent essay.

Legal Charges and Fines

Last week, Binance and Zhao faced criminal charges over alleged violations of sanctions and money transmitting laws. As a result, they agreed to pay a hefty fine of $4.3 billion, leading to Zhao relinquishing his role as CEO. A U.S. court deemed Zhao a flight risk, necessitating his stay in the U.S. until his sentencing in the following year.

Comparison with Traditional Financial Institutions

Hayes suggested that the penalties enforced on Binance and Zhao are 'absurd' when compared to those given to traditional financial institutions, emphasizing the 'arbitrary nature of punishment by the state.'

Cases in Point: Goldman Sachs

Hayes cited the case of Goldman Sachs, which was heavily involved in the 1Malaysia Development Bhd. (1MDB) scandal uncovered in 2015. Despite aiding Former Malaysian Prime Minister Najib Razak and financier Jho Low in misappropriating over $10 billion, Goldman Sachs was only fined $2.9 billion in 2020. Its CEO during this time, Lloyd Blankfein, was allowed to retire with his stock options intact, and the corporation was not deemed criminally responsible.

Implications for Decentralization and the Blockchain Revolution

According to Hayes, the experiences of Binance and CZ in the U.S. legal system exemplify the resistance against decentralization and the blockchain revolution. These innovations pose a direct challenge to state power, as they reduce the need for centralization and the control that state powers exert through it.

Hayes added that the financial and political establishments faced problems as intermediaries facilitating flows into and out of the blockchain-driven industrial revolution were not run by members of their class.

Hayes' Own Legal Troubles

Hayes himself has experienced legal issues. In February 2022, he pleaded guilty to violating the Bank Secrecy Act due to the intentional failure to deploy an anti-money laundering program at the exchange. Subsequently, he was sentenced to two years of probation later that year.

Edited by Jonathan Stoker