What was in Binance's Changpeng Zhao "sealed" file?

Changpeng Zhao got off lightly at his sentencing hearing in Seattle on Tuesday—so lightly that a judge only handed the Binance founder four months in prison for turning a blind eye to money laundering, and not the one or two years all of us were expecting. Much of this leniency came about because Zhao, a.k.a. CZ, took a plea deal and said all the right things. But part of it was due to a mitigating factor—one involving a “sealed” matter the judge and lawyers referred to on numerous occasions at the hearing.

The crypto world likes a good conspiracy and, sure enough, the fever swamps of Crypto Twitter began spouting theories about who Zhao sold out or what sort of nefarious deal he must have cut. One well-known account even claimed Zhao got only four months because he “ratted” while his one-time rival Sam Bankman-Fried got 25 years because he “didn’t rat” (an ironic claim given the FTX founder tried to throw everyone he knew, including his ex-girlfriend and his lawyers, under the bus).

So what exactly did Zhao tell the feds? We don’t know for sure, but my best guess is the deal he cut is based on Binance continuing to keep working with law enforcement to identify terrorist finance networks. As Leo pointed out, anyone who has followed crypto and Binance closely knows the company has been assisting police and spooks around the world for a while now, helping them to ferret out hardcore bad guys. Earlier this year, for instance, I spoke with Binance exec and former IRS agent Tigran Gambaryan, who told me a credible story about the company helping to take down an ISIS cell in Asia. (Gambaryan is currently being held as a hostage by Nigeria’s thuggish government).

It’s also useful to remember that the sweet plea deal Zhao cut was years in the making. He only decided to turn himself in following many months of negotiations between the Justice Department and Binance’s army of expensive lawyers. Zhao also had leverage since he could have elected to just stay in Dubai, where he owns a home and where authorities are reluctant to extradite wealthy residents. The Binance founder appears to have bided his time for years, handing over juicy tidbits to law enforcement while negotiating his plea deal downward.

The most interesting thing to me now is what Binance and Zhao plan to do once the sentence is served. Will they revert to outlaw behavior once the U.S. government is off their back? Or is the plan to follow the straight and narrow—in the same way that the biggest companies in the once-illegal alcohol and gambling industries have done? We will find out soon enough. Zhao is slated to be a free man by September.

Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts

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