Two prominent figures in the cryptocurrency industry, Sam “SBF” Bankman-Fried and Changpeng “CZ” Zhao, are facing very different prison sentences in the United States. This has sparked speculation and debate about the disparity in treatment within the U.S. legal system. Bankman-Fried, who could be in his fifties by the time he is released, is likely to have fewer assets compared to Zhao, who is expected to be out of prison by the end of the year and has an estimated net worth of $33 billion, according to Forbes.
Let’s take a step back and examine the timeline of events. Bankman-Fried was arrested in 2022, extradited to the United States, pleaded not guilty, placed under house arrest, and later remanded to jail due to allegations of witness intimidation. He then faced a six-week trial, during which he was found guilty of seven felony charges related to defrauding investors and misusing customer funds. He has been sentenced to 25 years in prison. On the other hand, Zhao was charged in 2023, pleaded guilty, remained free on bail, and received a four-month prison sentence. He is expected to surrender himself in the near future.
The charges against Bankman-Fried were more severe, including wire fraud in connection with the secret misappropriation of billions of dollars in crypto held by FTX to support Alameda. In contrast, Zhao faced a single charge related to the failure to maintain an effective Anti-Money Laundering program at Binance. Mark Bini, a former assistant U.S. attorney, emphasized that while both crimes were serious, Bankman-Fried’s actions were far more significant.
Throughout the legal proceedings, Bankman-Fried and his defense team have maintained that he believed he was acting in the right. However, Judge Lewis Kaplan accused him of lying on the stand and described his testimony as evasive. In an interview following his 25-year sentence, Bankman-Fried expressed disbelief, stating that he never thought his actions were illegal.
The trial presented evidence that challenged Bankman-Fried’s defense. Several government witnesses, including his former girlfriend and Alameda Research CEO Caroline Ellison, suggested that he orchestrated the misuse of FTX user funds. On the other hand, Zhao remained silent about the case between U.S. authorities and Binance after reaching a $4.3 billion settlement and pleading guilty in November 2023. He submitted numerous letters of support from industry leaders, family members, and others. Judge Richard Jones acknowledged the overwhelming support for Zhao during the sentencing hearing, noting that he had taken significant risks for Binance, even though he believed Zhao was guilty of more serious offenses. However, the Department of Justice (DOJ) lacked sufficient evidence, leading to Zhao admitting to lesser crimes in his plea deal. As part of the deal, Zhao will pay $50 million.
Contrary to speculation, it is unlikely that Zhao and Bankman-Fried will be incarcerated together or housed in the same facility. While Bankman-Fried may serve his sentence in a San Francisco Bay Area prison, there is also a possibility that he will be allowed to stay in New York during his appeal. Zhao, on the other hand, will serve his four-month sentence at either the Camp at the Federal Correctional Institution Sheridan in Oregon or the Federal Detention Center SeaTac in Washington, with the reporting date yet to be determined.