Arthur Hayes, co-founder and former CEO of crypto derivatives exchange BitMEX, has expressed his criticism towards the penalties imposed by the U.S. government on crypto exchange Binance and its founder Changpeng Zhao (CZ), considering them disproportionate to the alleged offenses. In a post on Substack dated November 27, Hayes compared these punishments to those faced by executives from major traditional financial institutions for their own missteps, which he believes were far more serious in nature.
Hayes said in the post, "So why the fire and brimstone for a company not even a decade old? Was Binance so big and bad that it committed more crimes than any bank in American history, some of which have existed for centuries? Obviously, the treatment of CZ and Binance is absurd, and only highlights the arbitrary nature of punishment at the hands of the state."
Binance, known as the world's largest crypto exchange, agreed to a settlement with the U.S. Department of Justice (DOJ) on November 21 regarding historical compliance issues. The resolution includes a hefty penalty payment of $4.3 billion by Binance. Additionally, the company will permit a third-party monitor access to its transactions and accounts. CZ agreed to relinquish his position as CEO and plead guilty to failing to maintain an effective anti-money laundering (AML) program.
Hayes characterized CZ as an entrepreneur who successfully built up the world's largest crypto exchange while broadening financial inclusion. Despite these accomplishments however, CZ was penalized severely by what Hayes views as an outdated legal system. In contrast, Hayes contends that executives from established institutions like Goldman Sachs have faced lesser consequences for their infractions during their tenures.
According to Hayes, Lloyd Blankfein, former CEO of Goldman Sachs, was permitted to "retire with his stock options intact" despite the company’s involvement under his leadership in helping former Malaysian Prime Minister Najib Razak and financier Jho Loh embezzle over $10 billion. Furthermore, he claimed that HSBC's CEO faced no jail time even after his employees were found altering cash deposit points for Mexican Cartels to "launder money more efficiently."
Binance clarified in a November 21 post about the settlement that it had not been accused by U.S. agencies of either misappropriating user funds or engaging in market manipulation.
In May 2022, Hayes received a sentence of six months home detention for violating the Bank Secrecy Act by failing to establish an effective AML program during his tenure at BitMEX, according to an official press release.