- Chief Compliance Officer and VP of Legal Affairs, Arrow Electronics
By 
Aaron Nicodemus2024-05-15T20:00:00
It’s unusual for chief executive officers to be held criminally responsible for financial misconduct at their firms.
Equally eye-opening is the significant discrepancy in sentences handed down recently against the leaders at a pair of cryptocurrency exchanges.
The founder of Binance, Changpeng Zhao, was sentenced to four months in prison last month after pleading guilty to one count of conspiring to violate the Bank Secrecy Act. Compare that to the outcome for the founder of FTX, Sam Bankman-Fried, who was sentenced to 25 years in prison in March for misappropriating billions of dollars and defrauding investors.
Why the wild disparity in their sentences? Of course, it has a lot to do with the differing nature of their cases—Bankman-Fried was found guilty by a jury on seven criminal counts, while Zhao pleaded guilty to only one.
Both cases also held significant monetary ramifications: Binance agreed to pay $4.3 billion across resolutions with several agencies, including the DOJ, while Zhao personally paid $150 million. Bankman-Fried agreed to forfeit $11 billion as part of his punishment.
I argue the performance of the compliance teams at the two firms was as big a contrast as the penalties earned by their respective founders. Competent compliance is the biggest reason why Binance continues to operate, while FTX was forced to enter bankruptcy proceedings in November 2022 and will never reopen.
THIS IS MEMBERS-ONLY CONTENT. To continue reading, choose one of the options below.
News and analysis for the well-informed compliance or audit exec.
Annual Membership best value
Subscribe now for $365
Our lowest price ($1 per day) for one year.
The chief financial officer of the Epoch Times was charged with laundering at least $67 million in illegally obtained funds to bolster the fortunes of the newspaper and himself.
There are a slew of compliance lessons to be learned from the $4.3 billion settlement that Binance, the world’s largest cryptocurrency exchange, reached with the U.S. government.
Federal agencies hit Binance with more than $4.3 billion in penalties and imposed multiple compliance monitorships on the virtual currency exchange as punishment for its repeated and intentional violations of U.S. anti-money laundering laws, sanctions, and other regulations.
Top-of-mind issues addressed at Compliance Week’s Third-Party Risk Management & Oversight Summit, held June 3-4 in Atlanta, included safe deployment of artificial intelligence, assessing vendor viability and sustainability, understanding the role of procurement in risk ranking, the intersection (or lack thereof) between data privacy and cybersecurity, and many others.
Anne Morriss, co-author of “Move Fast and Fix Things,” advises compliance officers to tap into curiosity, communicativeness, and comfort with discomfort to build organizational trust, fast.
Regulators and government agencies often speak to the value of empowered corporate compliance programs to advancing their mission. Why not practice what they preach by empowering compliance among their own ranks?
