Crooked Crypto Billionaires Are Just One of the Major Things Wrong With Our Country

by | May 2, 2024 | The Truscott Commentaries

Photo by Kanchanara, Unsplash

Crooked Crypto Billionaires Are Just One of the Major Things Wrong With Our Country

by | May 2, 2024 | The Truscott Commentaries

Photo by Kanchanara, Unsplash

One of the really really big things wrong with this country is guys making billions and billions of dollars moving money around the world and not giving a half a shit where it came from or who got hurt or killed making it.

Republished with permission from Lucian K. Truscott IV

Big story yesterday: a rich guy, who engaged in a years-long scheme of fraud and international law breaking involving laundering money for drug running, child prostitution, terrorism, and Russian oligarchs, got off with a slap on the wrist. This rich guy is a crypto billionaire, Changpeng “CZ” Zhao, the founder and former CEO of the Binance crypto exchange.

You may recognize his name as the guy who, with a single tweet in November of 2022, brought down his fellow crypto zillionaire Sam Bankman-Fried (SBF) and his crypto exchange, FTX. SBF was arrested in December of 2022 and accused of perpetrating a multi-billion dollar fraud. He was convicted late last year and sentenced to a 25-year term in federal prison and ordered to repay $11 billion in forfeiture of the money he swindled from investors.

So why, you might ask, was CZ Zhao on the front page of the New York Times financial section this morning above a story announcing that he had been sentenced to only four months in prison for committing crimes that put billions in his pocket? Well, he is one well-connected dude, according to the Times, which breathlessly reports that Zhao has been visiting Telluride, Colorado, and Moab Utah, and has been meeting with such Silicon Valley luminaries as OpenAI CEO Sam Altman, “chatting” about start-ups and “planning his next act.”

Listen to this and see if it doesn’t sound like it came straight from a PR release Zhao paid some crisis management firm several hundred grand to generate for him: Zhao “has a $33 billion fortune, according to Forbes, and he announced last month that he was starting a new web platform to promote online education.”

Just wow. Having pledged to donate “99 percent” of his fortune—something SBF was also famous for promising—Mr. Zhao, a Chinese-born “businessman” with citizenship in both Canada and the United Arab Emirates, is now all up in creating something called “online education.” The Times also assures us that “many crypto entrepreneurs, investors and dignitaries have continued supporting Mr. Zhao, court records show.” Gee, I wonder why? They wouldn’t be among the “dignitaries” who didn’t lose their shirts trading cryptocurrencies on one or both of Zhao’s Binance crypto exchanges, would they?

These “dignitaries” sure do stick together, don’t they?

According to the plea agreements Binance and Zhao signed onto yesterday, here’s what Zhao did. He set up one company called that allowed anyone to trade in cryptocurrencies on its exchange, and when I say anyone, I mean child sex traffickers, ISIS terrorists, al Qaeda operatives, members of Iran’s Revolutionary Guard, and drug lords, Russians located in Crimea and the Russian-held territories in Donetsk and Luhansk, and people in other regions of the world under U.S. sanctions such as Syria, Russia, Cuba, North Korea, and Iran. He didn’t register his business with the FTC, the SEC, he didn’t abide by any FinCen regulations, and he didn’t carry out what is called “KYC” or Know Your Customer queries and registrations. He just let anybody from anywhere trade on his exchange and awarded many of them so-called “VIP” status, allowing them privileges not available to lesser investors. 

When all this came to the attention of U.S. regulators, Zhao and Binance announced they were setting up a division in this country known as Binance.US that would do all the registering and identity-checking that the other Binance didn’t do. Then they proceeded to tell their U.S. VIP account users who had provided KYC identity data to Binance how to keep using the international account secretly. This they accomplished by calling the VIP account holders on the telephone, “so they would leave no trace” according to the plea agreement. People who had money in offshore accounts would be handled by the “VIP team” who would help the user to register a “new separate account for the offshore entity and transfer the users VIP benefits to that account while the user transferred their holdings to the new account.”

Confusing enough? Going through the plea agreement describing the nature of the Binance scam is like reading Sanskrit…all of it on purpose, because it was being done to get around U.S. regulations and help the U.S. account holders make more money that they wouldn’t have to report to U.S. entities such as…uh, could it be the IRS? Gotcha. What it accomplished is described in the plea agreement this way: “help users continue to access despite the purported block” that was supposed to force them to use the part of Binance that was properly registered in the U.S. and followed all reporting requirements.

But that’s just U.S. users. Between August 2077 and April 2022, there was approximately $106 million in Bitcoin transferred from “wallets” in Hydra, “a popular Russian darknet marketplace frequently used by criminals that facilitated the sale of illegal goods and services,” according to the DOJ. That would be sex trafficking, drugs, weapons sales…you get the picture. 

So, what’s going on with all this financial gobbledygook? Binance was sitting there moving money around the world using cryptocurrency—Bitcoins and other types—much of it funny money from sanctioned countries and outlaw groups and individuals that couldn’t move money through normal banking channels because banks, especially U.S. banks, were all registered with the proper federal agencies and would have to report the arrival or departure of any funny money from, say, Crimea or Iran or Syria or North Korea.

The point is, money is not any good to you unless you can use it. Say you’ve got a few tens of millions sitting around in cash bundles you “earned” by trading little girls or boys who you’ve moved secretly from, say, Crimea or Eastern Ukraine to Europe to be used for prostitution. You want to use your “earnings” to buy real estate in, say, the South of France, or you want to buy a Ferrari or an expensive Mercedes. You buy some Bitcoins from Binance, and Binance takes a fee for that transaction. Then you trade them, again using Binance, to someone in, say, France, who pays you in Euros, and Binance takes a fee on that transaction. Then you sell your Bitcoins for Euros in France, and Binance takes a fee there, too, and you’ve got Euros you can deposit in an account in France and write a check to buy your house in Nice or Aix or your Ferrari or Mercedes. 

CZ Zhao is said to be worth 33 billion dollars. At least some of his billions came from fees on those kinds of transactions, from crooked money laundering, to put it in simple, easy to understand terms. 

Why would CZ Zhao spend all the time he spent figuring out how to set up “Tier One” and “Tier Two” accounts at Binance, with “VIP Benefits” and private phone calls to account holders to tell them how to move their Bitcoins from accounts with their names on them to accounts with the only identity being an untraceable email address—untraceable to anyone but members of the Binance “VIP team” they talked to on the phone using an encrypted program such as WhatsApp.

Because the more Bitcoins he sold and the more trades he generated put more money in his pocket.

“A short prison stint,” the New York Times reports, “‘is a small price to pay to be a billionaire for life,’” said John Reed Stark, a former Securities and Exchange Commission official and a critic of the crypto industry. “‘The industry just does not care about the extraordinary crypto crime wave ushered in by people like CZ.’”

Yesterday, CZ Zhao, he of the Telluride trips and the Silicon Valley billionaire meetings, signed his plea agreement promising to pay a fine of $50 million and serve four months in some white-collar jail cell, and have the company where he used to be CEO disgorge $4 billion in ill-gotten profits. So where is good ole’ CZ today?

Waiting to make arrangements with the Department of Justice for the date he reports to the white-collar cell, because of course guys like CZ Zhao get to pick when they report to prison. In the meantime, Ronghui Gu, a computer science professor at Columbia University, tells the New York times that his friend CZ Zhao is “looking for opportunities to invest in the large data centers that power A.I. applications.” You know the kind of data centers he’s talking about: the kind that his pal Sam Altman will need to build to run OpenAI, where the two of them will add to their already bulging billionaire “wallets” as they’re called in Bitcoinese. 

Oh, by the way, Ronghui Gu is the co-founder of a startup company called CertiK, which his pal CZ Zhao helped to finance through Binance. The business of CertiK is making sure billions of dollars don’t get lost in zillions of lines of crypto-code, because of course it is.

There is a lot that is wrong with this country, but one of the really really big things wrong with it is these kinds of guys making billions and billions of dollars moving money around the world and not giving a half a shit where it came from, who got hurt to generate it, and where it’s going, as long as a percentage of it ends up in their pockets.

Welcome to the new future, same at the old future.


Lucian K. Truscott IV

Lucian K. Truscott IV

Lucian K. Truscott IV, a graduate of West Point, has had a 50-year career as a journalist, novelist and screenwriter. He has covered stories such as Watergate, the Stonewall riots and wars in Lebanon, Iraq and Afghanistan. He is also the author of five bestselling novels and several unsuccessful motion pictures. He has three children, lives in rural Pennsylvania and spends his time Worrying About the State of Our Nation and madly scribbling in a so-far fruitless attempt to Make Things Better.

You can read Lucian Truscott's daily articles at We encourage our readers to get a subscription.

Follow Us

Subscribe for Updates!

Subscribe for Updates!

Join our mailing list to receive the latest news and updates from our team.

You have Successfully Subscribed!

Share This