In a surprising move, US President Donald Trump has granted a pardon to Changpeng Zhao, the founder of Binance, the world’s largest cryptocurrency exchange. Zhao was previously sentenced to prison for failing to prevent the use of his platform for money laundering connected to serious crimes, including child sexual abuse, terrorism, and drug trafficking.
The announcement came from White House Press Secretary Karoline Leavitt, who emphasized that Trump was exercising his constitutional authority. She claimed Zhao was prosecuted by the Biden Administration as part of its aggressive stance against cryptocurrency, suggesting that the pardon aimed to rectify what she described as “egregious over-sentencing.”
The decision has raised eyebrows, particularly given Zhao’s connections to the Trump family’s cryptocurrency ventures. Critics, including economist Robert Reich, allege that this indicates a conflict of interest and characterizes the pardon as part of a “Pay-to-Pardon Scheme.” In the wake of the announcement, Zhao expressed gratitude to Trump, stating, “Deeply grateful for today’s pardon and to President Trump for upholding America’s commitment to fairness, innovation, and justice.” Following the news, the value of Binance’s token, BNB, surged by 8 percent.
Zhao had served a four-month sentence for violating the US Bank Secrecy Act, becoming the first person to receive prison time for such an infraction, which mandates financial institutions to know their customers and report suspicious transactions. Prosecutors accused Zhao of facilitating more than 1.5 million trades violating US laws, including those against al-Qaeda and Iran. Investigators reported that the lax customer verification on Binance enabled drug traffickers and networks involved in child exploitation to transfer illicit funds anonymously.
In court, Zhao admitted his shortcomings, saying, “I failed here… I deeply regret my failure, and I am sorry.” His guilty plea also resulted in Binance agreeing to pay $4.3 billion to settle related allegations.
The pardon not only clears Zhao for potential future endeavors in the US but may also lead to his return to Binance, which has continued operations since his arrest. Zhao has historically been seen as a competitor to Sam Bankman-Fried, founder of the now-defunct FTX exchange, who is currently serving a lengthy prison sentence for various financial crimes.
Trump defended his decision by asserting that many believe Zhao was “not guilty of anything,” and mentioned that numerous good individuals had requested the pardon. The White House stated that Biden’s administration had harshly targeted the cryptocurrency sector and noted that Trump seeks to amend this perceived overreach.
Since his return to office, Trump has adopted a more lenient stance toward the cryptocurrency industry, loosening regulations and even proposing the formation of a national cryptocurrency reserve. Zhao’s pardon follows a pattern of granting clemency to various crypto entrepreneurs associated with Trump, including halting a fraud case against Justin Sun and pardoning the cofounders of BitMEX earlier this year.
However, this latest development has led to criticism from various quarters, including Democratic Senator Elizabeth Warren, who called the pardon a form of “corruption.” Furthermore, the political landscape around Trump’s dealings in cryptocurrency is fraught with questions of ethics, notably concerning Trump’s ownership interests in World Liberty Financial, which recently issued a stablecoin backed by US treasuries on Binance’s blockchain.
Despite the White House’s assurances that Trump’s crypto holdings are in a trust managed independently, the extent of his financial ties to Zhao raises significant concerns about conflicts of interest, especially given reports that Trump held a substantial amount of World Liberty Financial tokens, making crypto a pivotal component of his wealth.
