TD bankers weren’t jailed over money laundering. But this guy sure was

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Last week, the Canadian cryptocurrency billionaire Changpeng Zhao made his first public appearance after leaving U.S. prison. And Mr. Zhao talked about Toronto-Dominion Bank’s money-laundering woes.

Mr. Zhao is founder of the world’s largest cryptocurrency exchange, Binance, which has broken U.S. anti-money-laundering laws in a manner not too different from TD TD-T. Binance was fined US$4.3-billion, and Mr. Zhao went to prison for four months.

At a crypto conference in Dubai on Thursday, Mr. Zhao was asked if he thought his sentence was fair.

“I can give you a couple of data points for people to benchmark,” Mr. Zhao said. “We failed to implement an adequate anti-money-laundering program. … I’m the only one who went to jail for this in U.S. history.”

This is where Mr. Zhao brought up TD, which recently pleaded guilty to conspiracy to commit money laundering and has been fined, along with other penalties.

No TD executive was personally charged or even publicly shamed by the authorities, Mr. Zhao said. “No one was named. Just the company was fined.”

Keep in mind that Mr. Zhao’s plea deal bars him from speaking ill of it. This was as far and as explicit as Mr. Zhao could go in saying, “Why did I have to go to prison while these TD bankers did not?”

A most thought-provoking question.

U.S. Attorney-General Merrick Garland has said the TD investigation “is continuing aggressively, and we do expect to see more prosecutions.” But it’s unclear if he was talking about senior executives or the likes of the two lower-level employees charged so far.

This distinction is important to many observers.

Also last week, Massachusetts Senator Elizabeth Warren said in a letter to the U.S. Department of Justice: “Until and unless those executives who presided over TD Bank’s institutionalized money laundering are held accountable, banks will continue to factor enforcement fines into the cost of doing business, rather than approaching compliance with our money laundering laws with the seriousness it requires.”

This is, to be sure, a most on-brand move for Ms. Warren. She has also said she wants to break up big banks, impose an “ultra-millionaire” tax and go after investors’ unrealized capital gains. If TD executives saved her from a burning building, Ole Lizzy would say they need to be arrested for breaking down the door.

Just as how it would be entirely expected (and in his interest) that Mr. Zhao would call out these disparities in outcomes.

After all, no two cases are exactly alike. The dirty money on Binance had flown to groups including “terrorists, cybercriminals, and child abusers,” while TD’s case appeared to involve only drug traffickers. Binance’s case involved the breaking of U.S. sanctions, which TD’s did not. There’s a whole lot of crypto-specific stuff Binance did that doesn’t apply to TD.

But if we are allowed to compare only exact replicas, we’ll never be able to compare anything. And we should be judging statements by their merit instead of their source.

If we boil down what Binance and TD did, it’s hard to tell the difference. They profited off bad actors who used them to move dirty money. The amounts involved are similar at “hundreds of millions.” See if you can tell which Justice Department comments refer to Binance and which to TD:

• “Because of the crimes it committed – now it is paying one of the largest corporate penalties in U.S. history… [the company] turned a blind eye to its legal obligations in the pursuit of profit.”
• The company “chose profits over compliance with the law – a decision that is now costing … billions of dollars in penalties.”
• “In one instance a compliance employee asked a manager what ‘the bad guys’ thought about the [company]. The manager replied: ‘Lol. Easy target.”
• “As one compliance employee wrote, “we need a banner ‘is washing drug money too hard these days – come to [our company] we got cake for you.’”

(The answers: Binance, TD, TD, Binance.)

Now, to be clear, I’m not saying any TD executive needs to go to jail like Mr. Zhao. I’m not even saying any executive, in fact, needs to be personally charged. Maybe they do. Maybe they don’t. Maybe it’s the reverse: Mr. Zhao shouldn’t have been personally charged and been, in his words, the only one in U.S. history to go to prison for this crime.

But however subjective and unknowable the ideal situation, it’s clear where things stand now: Company 1 had one outcome. Company 2 had another. People are criticizing these outcomes, and unless the situation changes, that’s not going to stop.