Trump pardons Binance founder Changpeng Zhao

The announcement that US President Donald Trump granted a full pardon to Changpeng Zhao (“CZ”), the founder of the world’s largest cryptocurrency exchange, Binance, has ignited intense debate about the intersection of politics, finance, and the future of the crypto industry. This move follows Zhao’s 2023 guilty plea to a criminal charge of failing to maintain an effective anti-money laundering (AML) program and his subsequent four-month prison sentence. The pardon clears Zhao, potentially allowing him to return to the crypto business he co-founded in 2017.

Zhao and Binance’s legal troubles stemmed from allegations that the exchange failed to report suspicious transactions and allowed money to flow to entities including US-designated terrorist groups like Hamas and al-Qaeda, as well as cybercriminals. Binance ultimately pleaded guilty to a breach of sanctions and anti-money laundering regulations, agreeing to a record US$4.3 billion penalty.

White House Press Secretary Karoline Leavitt framed the pardon as an end to the previous administration’s “war on cryptocurrency”. She asserted that the case against Zhao, which was prosecuted by the Biden administration, was “overly prosecuted” and lacked allegations of fraud or identifiable victims. According to the White House, Trump exercised his constitutional authority to correct this “overreach” and “misjustice”.

Zhao himself expressed deep gratitude, posting on social media that he thanked President Trump for “upholding America’s commitment to fairness, innovation, and justice” and vowed to “help make America the Capital of Crypto”. The pardon has also been lauded by Binance spokespersons as “incredible news”.

This pardon is not an isolated incident; Zhao joins a growing list of crypto executives and entrepreneurs, including Silk Road creator Ross Ulbricht and employees of the BitMex crypto exchange, who have received legal relief from President Trump during his second term.

Critics, however, point to the pardon as a sign of deepening, potentially concerning, connections between the Trump administration and the crypto industry. Democratic Senator Elizabeth Warren, a vocal critic, condemned the decision as a “kind of corruption,” noting that Zhao pleaded guilty, then boosted one of Trump’s crypto ventures, and lobbied for the pardon.

The Trump administration has publicly “embraced cryptocurrencies,” overhauling the US’s regulatory stance, while the president’s family has launched crypto businesses. Of particular note:

• Binance recently received a US$2 billion investment from an Abu Dhabi fund, MGX, which was paid entirely in the USD1 stablecoin issued by World Liberty Financial, a crypto company controlled by the Trump family. This move effectively legitimized the Trump family’s digital currency and was described as “highly lucrative for the firm”.
• Zhao’s investment firm has recently invested millions into a Nasdaq-listed stock that buys Binance’s BNB token. The price of the BNB token jumped after the pardon announcement.
• Earlier this year, the Trump administration halted a fraud investigation into crypto billionaire Justin Sun, who controls the Tron platform, following his investments in the Trump family’s World Liberty Financial.

Cornell University professor Eswar Prasad stated that it is “clear that the connections between the Trump administration and the crypto industry run deep, and that the US government machinery will be openly deployed to support this industry”.

The full pardon is a major victory for Zhao and Binance. It could lift limitations on Zhao’s travel to the US and his involvement in US securities markets that were imposed as part of his legal settlements. It also sends a clear message about the administration’s intention to ease scrutiny on the crypto industry.

While Zhao had previously disputed that he sought a deal in exchange for a pardon, the timing and context of the decision have led to significant scrutiny and accusations of an enrichment deal. The White House, however, maintains the pardon was a “thoroughly reviewed” correction of an “overreach” by the previous administration.

The pardon is likely to only intensify the debate over how the United States will regulate and interact with the increasingly powerful, and now politically connected, world of cryptocurrency.