Zhao, Kwon and Mashinsky. Ex-bosses of cryptocurrency firms face prosecution

In 2018, the South Korean entrepreneur co-founded the Singapore-based company Terraform Labs (TFL), developing cryptocurrencies terraUSD and luna, which went bankrupt in May 2022. According to the US regulator, Kwon and TFL had previously repeatedly claimed that the value of the tokens would increase, thereby misleading investors. This collapse is estimated to have cost investors more than $40 billion. TFL filed for bankruptcy in the United States in January of this year and asked the court for protection from creditors to continue its limited operations for now.

Interpol issued an international arrest warrant for Kwon last September. Kwon and his associate face charges in both the United States and South Korea. Last March, Kwon and his companion were detained as they tried to fly from Podgorica, Montenegro, to Dubai. According to the prosecutor’s office, they wanted to do so with the help of fake passports.

The founder of the FTX cryptocurrency exchange got 25 years

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Kwon’s travel documents for Costa Rica, Belgium and South Korea were found. In mid-May, the court in Podgorica decided to release Kwon on bail, but the higher instance court overturned this verdict a few days later. In June 2023, a court in Montenegro sentenced To Kwon and his associate, TFL CFO Han Changchun, to four months in prison for forging travel documents.

In February of this year, Montenegro extradited Hana to South Korea, and in March the appeals court also decided to extradite To Kwon to South Korea. It is not yet clear when that will happen.

Kwon’s stay in Montenegro became part of the campaign before last year’s parliamentary elections in that country. Kwon intervened by sending a letter to Prime Minister Dritan Abazović, in which he stated that he was acquainted with the leader of the Europe Now movement, Milojko Spajic. Abazović subsequently accused Spajic’s movement, which won the elections in June, of secret financing through Kwon’s cryptocurrencies. Prime ministerial candidate Spajić and Kwon himself rejected these accusations.

He was born To Hjong-kwon on September 6, 1991 in Seoul. He studied computer science at Stanford University in the USA.

In 2017, the American-Israeli entrepreneur of Russian origin founded the cryptocurrency credit company Celsius Network. Cryptoloan companies offer customers the opportunity to deposit cryptocurrencies in interest-bearing products. Mashinsky described himself as a “modern-day Robin Hood” and promised investors returns of up to 17 percent. Cryptoloan companies experienced rapid growth during the covid-19 pandemic, when they attracted depositors with high interest rates. However, they came under pressure in 2022 due to the fall in cryptocurrency prices. In July 2022, Celsius Network declared bankruptcy.

New York State Attorney General Letitia James indicted Mashinsky last January, accusing him of defrauding investors. According to her, Mashinsky promoted Celsius as a safe alternative to traditional banks while concealing mounting losses from risky investments that contributed to the company’s downfall.

Last July, Mashinsky was arrested and charged with fraud and price manipulation of the Celsius cryptocurrency. After his arrest, Mashinsky appeared in court, where he pleaded not guilty. He was then released on $40 million bail. If convicted, he faces up to several decades in prison.

He was born on October 6, 1965 in the then Soviet Union into a Jewish family. In the 1970s, his parents obtained permission to leave the country and the family went to Israel. Mashinsky served in the Israeli army, where he completed pilot training and was a member of the Golani Brigade. He has lived in the United States since 1988. He is married with six children.

A Canadian businessman of Chinese descent, who is also a citizen of the United Arab Emirates, founded Binance in Shanghai in 2017 and turned it into the most important center of the global cryptocurrency market. Its main exchange, Binance.com, is the largest cryptocurrency exchange in the world – the year before last, according to CryptoCompare, it processed trades worth about 23 billion dollars (536 billion crowns).

The U.S. Department of Justice began looking into Binance in 2018, according to Reuters. In late 2020, federal investigators subpoenaed the exchange for internal records regarding anti-money laundering measures. Binance then faced charges of money laundering, conspiracy to operate an unlicensed money transfer business and violation of US sanctions. The firm facilitated at least 1.1 million transactions worth more than $898 million involving customers in Iran, according to a court filing. In December 2023, the firm agreed to plead guilty and pay a $4.3 billion fine. The agreement thus ended a several-year investigation into this cryptocurrency exchange.

Zhao, known in the industry by his initials CZ, pleaded guilty last December to violating US anti-money laundering rules and US sanctions. He also agreed to pay a $50 million fine and subsequently announced that he had resigned as CEO. He also had to leave the company for three years, according to the court filing. Zhao’s resignation was part of a broader settlement with the Justice Department that kept the company operating. One of its employees, Richard Teng, who was in charge of local markets until then, became the new head of Binance.

Zhao now faces a maximum sentence of 18 months in prison under the law. The defendant agreed not to appeal the sentence of this length. A verdict is expected at the end of April.

Zhao was born on September 10, 1977 in Jiangsu, China. In the late 1980s, he and his family moved to Canada. He studied computer science at McGill University in Montreal.

According to the prosecutor’s office, Sam Bankman-Fried defrauded clients, investors and creditors of more than ten billion dollars (roughly CZK 234 billion). The prosecutor’s office proposed a sentence of 40 to 50 years in prison for the founder of FTX, while his defense attorneys called for an adequate sentence of up to six and a half years in prison. A court last week sentenced Bankman-Fried to 25 years in prison.

Bankman-Fried illegally used FTX clients’ money for his own purposes, including the purchase of luxury properties in the Caribbean, according to prosecutors. “Tens of thousands of people and companies from several continents became victims of the defendant over several years. He stole money entrusted to him by clients. He lied to investors, sent forged documents to creditors, pumped millions of dollars in illegal donations into our political system, and bribed foreign officials. Each of these crimes deserves a long sentence,” the prosecutor’s office said.

Before its collapse, FTX was the second largest cryptocurrency exchange in the world and the gateway to the digital asset market for millions of people. The firm filed for bankruptcy protection from creditors in November 2022. Earlier this year, it announced it had abandoned efforts to resume operations of its cryptocurrency exchange. Instead, it decided to focus on liquidating its assets and returning funds to customers.

Bankman-Fried comes from a Jewish family and was born in 1992 on the campus of Stanford University. Between 2010 and 2014, he studied at the Massachusetts Institute of Technology, graduating in 2014 with a degree in physics, with a minor in mathematics.

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