[Jweb_Guru]

The prosecution was not political lol, he went out of his way to support money laundering on the Binance platform. The reason he complied with the prosecution and pled guilty rather than try to fight it out in court was that they were able to produce a ton of evidence that he deliberately ignored regulators and regulations designed to prevent money laundering in order to make money off sanctioned groups and criminal organizations using the exchange as a way to circumvent KYC/AML laws. Please don't take what Balaji says about companies he invested in at face value.

[dc396]

It must really suck and be incredibly disheartening to be one of the folks who pursued this to a conviction.

[Jweb_Guru]

The justifications for why the pardon is okay are ridiculously flimsy and I assumed that it was because they weren't really trying, but bewilderingly it does actually appear to have convinced some credulous people on Hacker News, so I suppose enough consent was manufactured that people think going out of your way to let money launderers use your platform is not a big deal? Maybe it's because people don't understand that typically the reason people launder money is because they committed major crimes to get that money and have no way to actually use it without getting caught.

For example if your crypto is the proceeds of ransomware, you're going to have a hard time cashing out without using something like Monero (which effectively has no offramps) without going through an exchange that knows perfectly well that you're trying to touch tainted goods. Exchanges like Binance that just don't bother to check who their customers are when they withdraw cash for such assets are just as critical to the ransomware plague as any security bug or social engineering issue. It's one of the reasons that pre-crypto, even though ransomware was technically feasible, it was never able to grow into a large-scale operation--no offramps. But hey maybe the official stance of CZ supporters is now that ransomware is good, actually, and if you don't like it it's because you have partisan bias (???)

[drak0n1c]

Those prosecutors were deeply embarrassed by missing FTX at the time, so they then had the SEC and IRS harass and threaten innocent US citizens in Japan and the US as they fished for charges merely because they happened to once work for or hung out with CZ or employees at Binance.

CZ is the first and only known first-time offender in U.S. history to receive a prison sentence for this single, non-fraud-related charge of improper platform AML KYC implementation. Big banks routinely pay a fine for this, and never face imprisonment. The judge found no evidence that he knew of any illicit transactions and that it was reasonable for him to believe there were no illicit funds on the platform. Credit where it's due, they somehow pulled off a 4 month sentence for this unprecedented charge. And now it's all for naught.

[disgruntledphd2]

Having a bad compliance system is very very different from actively resisting having a compliance system.

Historically bank CEOs have been smart enough to note this difference.

[hackernudes]

CZ already served the time in prison. It's not clear to me whether he and Binance have paid the fines yet.

[TheBlight]

Balaji was the former CTO of a rival company. Wouldn't he be incentivized to not support CZ?

[cthalupa]

No. He had the same financial incentives to not want to have to worry about the BSA and dealing with AML etc. as CZ.

This is not a company vs. company sort of issue, this is a "I want to avoid regulations that would cost me money as a fundamental aspect of my industry " issue.

If Coinbase thought they could legally not worry about all of this, do you think they would want to deal with it?

The sheer quantity of money used in cryptocurrency for money laundering and activity where traditional payment processors will not accept payments (largely illegal, e.g. drugs, counterfeit goods) also means that the keeping the ecosystem healthy involves having ways for this money to flow.

[Jweb_Guru]

No. The entire crypto ecosystem requires a steady infusion of capital and an absence of regulations to prosper, since their primary use case outside of speculation is for handling money by people who can't get past normal KYC/AML checks. If those people no longer have anywhere to on/off ramp into the crypto ecosystem, most of its "legitimate" (in the sense of actually getting real value out of it rather than just speculating) use goes away.

[TheBlight]

I don't think you know what you're talking about. Surely everyone on the Coinbase platform is vetted seeing as they're a publicly traded company. Presumably the vast majority of Binance users are not in fact money launderers.

[Jweb_Guru]

"People who don't want KYC/AML checks" are not necessarily money launderers, and there are still plenty of people who just want to speculate. But money launderers are the people who need to send vast amounts of money through the crypto ecosystem and represented a very significant fraction of the assets managed by Binance (not that this actually affects whether what they were doing was illegal or not, BTW). Maybe you should read the indictment to find out what was actually going on, instead of making claims based on what seems reasonable to you!

(Frankly, the idea that being convicted for making the conscious decision to go out of your way to circumvent KYC/AML laws is somehow the result of partisan bias is ridiculous in itself, so none of this [or how Balaji claims to feel about the matter] is even really relevant).