At the White House last week, there was a telling exchange when CNN’s Kaitlan Collins asked Donald Trump why he chose to pardon Changpeng Zhao, the founder of Binance, the world’s largest cryptocurrency exchange, and whether the decision had anything to do with Binance’s involvement in his family businesses. Trump didn’t seem to like the question. He said he pardons a lot of people, and he dismissed Collins as “fake news.” He also claimed that he didn’t know Zhao, who served four months in prison last year after pleading guilty to failing to maintain an effective anti-money-laundering program at Binance. Trump went on to say that Zhao had “a lot of support” from people who felt what he did “wasn’t a crime” and who believed that Zhao “was persecuted by the Biden Administration. And so I gave him a pardon at the request of a lot of very good people.”
Not so long ago, the President was a vocal skeptic of crypto: in June, 2021, he remarked that Bitcoin “seems like a scam.” But, since returning to office as a crypto entrepreneur in his own right, he has done all that he can to promote the industry and rehabilitate some of its disgraced figures. On January 21st, he freed Ross Ulbricht, who was serving a life sentence in federal prison for his ownership and operation of the digital black market Silk Road until its closure, in 2013. In March, Trump pardoned three co-founders and a former senior employee of BitMEX, another crypto exchange, who, like Zhao, had pleaded guilty to violating anti-money-laundering laws. These pardons were highly questionable, to put it lightly. But at least the recipients didn’t have business ties with the Trumps. Zhao, who is known as C.Z., is in a different category.
According to the Bloomberg Billionaires Index, Zhao is among the top thirty richest people in the world, with a net worth of roughly sixty billion dollars. He was born in China, moved to Canada at the age of twelve, and now lives in the United Arab Emirates. Zhao founded Binance in Shanghai, in 2017, and was in charge when the Securities and Exchange Commission and the Commodity Futures Trading Commission brought civil cases against the company. In November, 2023, the Department of Justice reached a plea agreement with Zhao and Binance, in which the company paid more than four billion dollars in fines for violating anti-money-laundering and sanctions laws. The evidence presented in these cases included internal texts. In an exchange from 2020, the firm’s chief compliance officer remarked, of some of its customers, “Like come on. They are here for crime.” A colleague agreed, saying, “We see the bad, but we close 2 eyes.” On the occasion of Zhao’s guilty plea and the Justice Department’s settlement with Binance, Janet Yellen, who was then the Treasury Secretary, said that the company’s “willful failures allowed money to flow to terrorists, cybercriminals, and child abusers through its platform.”
Although Zhao resigned from Binance after his conviction and was banned from running the company, he still reportedly owns a majority of its shares and many billions of dollars worth of its tokens. Earlier this year, Binance was party to a transaction that helped boost the value of the Trump crypto empire. At some point, Zhao engaged lawyers and lobbyists associated with the President and his family to pursue a pardon. After it emerged that he had received one, even a few Trump supporters cried foul. “POTUS has been terribly advised on this; it makes it look like massive fraud is happening around him in this area,” Joe Lonsdale, a billionaire venture capitalist who co-founded Palantir Technologies, wrote on X.
Richard Painter, a University of Minnesota law professor who served in the White House as George W. Bush’s chief ethics lawyer, told me there is no parallel in American history for what we are witnessing. “Corruption scandals have usually involved campaign money going to politicians, from both parties,” Painter said. “This is the first time one has involved the President’s personal businesses and personal money.”
Some of the details leading up to last week’s pardon are murky. But, from reporting by several media outlets, we know quite a bit about the relationship between Binance and World Liberty Financial (W.L.F.), the crypto business that is majority-owned by the Trump family. Zhao was released from prison last September. According to a Bloomberg article, two sources said that, shortly after Trump’s reëlection, Zhao met with the businessman Steve Witkoff, a partner of the Trumps in W.L.F. who later went on to become the United States special envoy to the Middle East, at a Bitcoin conference in Abu Dhabi. (Bloomberg also cited a source close to Witkoff who said that Witkoff doesn’t recall this meeting.) In March, the Wall Street Journal reported that Zhao was pushing for a Presidential pardon, and that representatives of the Trump family had held talks about taking a stake in the U.S. arm of Binance. (At the time, Zhao denied seeking clemency, and no deal materialized.) That same month, W.L.F. announced that it was entering the fast-growing market for stablecoins and creating its own coin, USD1.
Stablecoins are digital money designed to be less volatile than cryptocurrencies like bitcoin. Unlike other digital assets, the value of stablecoins is meant to be backed, one to one, by reserves of safe assets, such as U.S. Treasuries. W.L.F.’s decision to launch USD1 came just before Congress began considering a piece of legislation to establish a regulatory framework for stablecoins, the GENIUS Act, which Trump eventually signed this past summer. And, in rolling out USD1, W.L.F. was looking to compete with established stablecoins including Tether, which was launched in 2014 by a crypto company of the same name, and USDC, which the fin-tech company Circle issued in 2018.
As with any new crypto product, the challenge facing W.L.F. was to get USD1 widely adopted. It got a big break in May, when Binance agreed to accept a two-billion-dollar investment from MGX—a fund controlled by the U.A.E. government—that was paid for using the Trump stablecoin. A spokesperson for MGX told Forbes that Binance asked for the deal to be settled in cryptocurrency, and the parties settled on USD1 because it is “backed 1:1 by a conservative mix of U.S. dollar-denominated assets . . . all held and managed by an independent, U.S.-based custodian in externally audited custodial accounts.” For W.L.F. and its new digital dollar, the transaction was transformative. “The deal caused the amount of the cryptocurrency in circulation to erupt 15-fold and overnight become one of the world’s largest,” the Journal noted. Also, MGX’s purchase of USD1 to close the deal sent a surge of capital to W.L.F., which, as long as Binance held onto the currency, the Trump company could invest in Treasuries and other safe securities to generate returns that Bloomberg estimated at about eighty million dollars a year.
An in-depth investigation by the Times, in September, pointed out that, two weeks after M.G.X. bought into Binance, the White House agreed to allow the U.A.E. to import hundreds of thousands of advanced computer chips that are used to train A.I. models, and which were subject to U.S. export restrictions. The Binance investment raised questions about the motivation of the U.A.E., an oil-rich Gulf kingdom, and about the Trump Administration’s security policies. But the most immediate beneficiary of the transaction was W.L.F. “We thank MGX and Binance for their trust in us,” the World Liberty C.E.O., Zach Witkoff, who is Steve’s son, said at a conference in Dubai.
Binance’s involvement with W.L.F. reportedly went beyond accepting USD1 as a means of payment and holding onto it. Bloomberg, citing three unidentified sources, reported that “Binance wrote the basic code to power USD1.” (A World Liberty spokesperson told the outlet that its report was “factually deficient.” A spokesperson for Binance said it followed “its standard listing process.”) The Journal reported on a partnership between W.L.F. and the crypto-trading platform PancakeSwap that was intended to boost adoption of USD1. PancakeSwap was created in 2020 by anonymous developers, who, according to the Journal, worked at Binance. The article also quoted Trevor Xu, a crypto entrepreneur based in Melbourne, Australia, who said, “The main narrative in the ecosystem is that Binance is supporting USD1.”
After Zhao’s clemency was announced, he posted on X, “Deeply grateful for today’s pardon and to President Trump for upholding America’s commitment to fairness, innovation, and justice. 🙏🙏🙏🙏” In July, Binance distanced itself from Zhao’s pursuit of a pardon, describing it to Bloomberg as a “personal” request. But, after Zhao had succeeded, a company statement hailed it as “incredible news” and thanked Trump “for his leadership and for his commitment to make the US the crypto capital of the world.”
In another era, the pardon and the financial dealings that preceded it would have sparked weeks of media coverage and congressional hearings. But, in the current maelstrom, there is a shocking headline every day, and the Republican Congress is in Trump’s pocket, which means the Democrats have their work cut out for them. Maxine Waters, the top Democrat on the House Financial Services Committee, described the pardon as a “payoff and a blatant example of the kind of pay-to-play corruption that Trump and his Administration continue to engage in.” Over in the Senate, Elizabeth Warren and Adam Schiff put forward a resolution to condemn the pardon, which would at least force their Republican colleagues to vote on it. So far, one of the only public rebukes from an elected Republican has come from Senator Thom Tillis, of North Carolina, who is not standing for reëlection next year.
Trump seems to have little to fear. Not only does he effectively control the legislature and the Justice Department; some legal experts say he has the Supreme Court and the Constitution (or, rather, his interpretation of it) on his side, too. Article II, Section 2 gives the President broad powers to grant pardons for federal crimes; the Court’s 2024 ruling in Trump v. United States granted him near-total immunity from prosecution for all his official acts. “It may be very difficult to rein him in,” Painter told me. “He thinks he is invincible.”
The larger lesson here is that the American political system isn’t equipped to deal with a rogue President, particularly when one party abrogates its responsibilities. In a number of cases, lower courts have challenged Trump’s action. But, from the Constitution and ethics laws to Congress and the Supreme Court, the checks and balances are failing. Trump knows this, and he is pressing his advantage. In the days before he issued a pardon to Zhao, it emerged that Trump is demanding more than two hundred million dollars in compensation from the Justice Department—from the American taxpayer, really—for various federal investigations that targeted him before he was reëlected. Also last week, demolition work began on the East Wing of the White House, where Trump is building a huge ballroom that he says will be funded in part by donations from corporations and wealthy individuals, many of which have a strong financial interest in staying on his good side. (According to the Administration, the donors include Apple, Amazon, Coinbase, Google, Lockheed Martin, Meta, and Microsoft.)
As Painter said, there has never been anything like this. Where Trump’s profiteering may lead is a question that cannot be answered purely in dollars and cents. ♦
At the White House last week, there was a telling exchange when CNN’s Kaitlan Collins asked Donald Trump why he chose to pardon Changpeng Zhao, the founder of Binance, the world’s largest cryptocurrency exchange, and whether the decision had anything to do with Binance’s involvement in his family businesses. Trump didn’t seem to like the question. He said he pardons a lot of people, and he dismissed Collins as “fake news.” He also claimed that he didn’t know Zhao, who served four months in prison last year after pleading guilty to failing to maintain an effective anti-money-laundering program at Binance. Trump went on to say that Zhao had “a lot of support” from people who felt what he did “wasn’t a crime” and who believed that Zhao “was persecuted by the Biden Administration. And so I gave him a pardon at the request of a lot of very good people.”
Not so long ago, the President was a vocal skeptic of crypto: in June, 2021, he remarked that Bitcoin “seems like a scam.” But, since returning to office as a crypto entrepreneur in his own right, he has done all that he can to promote the industry and rehabilitate some of its disgraced figures. On January 21st, he freed Ross Ulbricht, who was serving a life sentence in federal prison for his ownership and operation of the digital black market Silk Road until its closure, in 2013. In March, Trump pardoned three co-founders and a former senior employee of BitMEX, another crypto exchange, who, like Zhao, had pleaded guilty to violating anti-money-laundering laws. These pardons were highly questionable, to put it lightly. But at least the recipients didn’t have business ties with the Trumps. Zhao, who is known as C.Z., is in a different category.
According to the Bloomberg Billionaires Index, Zhao is among the top thirty richest people in the world, with a net worth of roughly sixty billion dollars. He was born in China, moved to Canada at the age of twelve, and now lives in the United Arab Emirates. Zhao founded Binance in Shanghai, in 2017, and was in charge when the Securities and Exchange Commission and the Commodity Futures Trading Commission brought civil cases against the company. In November, 2023, the Department of Justice reached a plea agreement with Zhao and Binance, in which the company paid more than four billion dollars in fines for violating anti-money-laundering and sanctions laws. The evidence presented in these cases included internal texts. In an exchange from 2020, the firm’s chief compliance officer remarked, of some of its customers, “Like come on. They are here for crime.” A colleague agreed, saying, “We see the bad, but we close 2 eyes.” On the occasion of Zhao’s guilty plea and the Justice Department’s settlement with Binance, Janet Yellen, who was then the Treasury Secretary, said that the company’s “willful failures allowed money to flow to terrorists, cybercriminals, and child abusers through its platform.”
Although Zhao resigned from Binance after his conviction and was banned from running the company, he still reportedly owns a majority of its shares and many billions of dollars worth of its tokens. Earlier this year, Binance was party to a transaction that helped boost the value of the Trump crypto empire. At some point, Zhao engaged lawyers and lobbyists associated with the President and his family to pursue a pardon. After it emerged that he had received one, even a few Trump supporters cried foul. “POTUS has been terribly advised on this; it makes it look like massive fraud is happening around him in this area,” Joe Lonsdale, a billionaire venture capitalist who co-founded Palantir Technologies, wrote on X.
Richard Painter, a University of Minnesota law professor who served in the White House as George W. Bush’s chief ethics lawyer, told me there is no parallel in American history for what we are witnessing. “Corruption scandals have usually involved campaign money going to politicians, from both parties,” Painter said. “This is the first time one has involved the President’s personal businesses and personal money.”
Some of the details leading up to last week’s pardon are murky. But, from reporting by several media outlets, we know quite a bit about the relationship between Binance and World Liberty Financial (W.L.F.), the crypto business that is majority-owned by the Trump family. Zhao was released from prison last September. According to a Bloomberg article, two sources said that, shortly after Trump’s reëlection, Zhao met with the businessman Steve Witkoff, a partner of the Trumps in W.L.F. who later went on to become the United States special envoy to the Middle East, at a Bitcoin conference in Abu Dhabi. (Bloomberg also cited a source close to Witkoff who said that Witkoff doesn’t recall this meeting.) In March, the Wall Street Journal reported that Zhao was pushing for a Presidential pardon, and that representatives of the Trump family had held talks about taking a stake in the U.S. arm of Binance. (At the time, Zhao denied seeking clemency, and no deal materialized.) That same month, W.L.F. announced that it was entering the fast-growing market for stablecoins and creating its own coin, USD1.
Stablecoins are digital money designed to be less volatile than cryptocurrencies like bitcoin. Unlike other digital assets, the value of stablecoins is meant to be backed, one to one, by reserves of safe assets, such as U.S. Treasuries. W.L.F.’s decision to launch USD1 came just before Congress began considering a piece of legislation to establish a regulatory framework for stablecoins, the GENIUS Act, which Trump eventually signed this past summer. And, in rolling out USD1, W.L.F. was looking to compete with established stablecoins including Tether, which was launched in 2014 by a crypto company of the same name, and USDC, which the fin-tech company Circle issued in 2018.
As with any new crypto product, the challenge facing W.L.F. was to get USD1 widely adopted. It got a big break in May, when Binance agreed to accept a two-billion-dollar investment from MGX—a fund controlled by the U.A.E. government—that was paid for using the Trump stablecoin. A spokesperson for MGX told Forbes that Binance asked for the deal to be settled in cryptocurrency, and the parties settled on USD1 because it is “backed 1:1 by a conservative mix of U.S. dollar-denominated assets . . . all held and managed by an independent, U.S.-based custodian in externally audited custodial accounts.” For W.L.F. and its new digital dollar, the transaction was transformative. “The deal caused the amount of the cryptocurrency in circulation to erupt 15-fold and overnight become one of the world’s largest,” the Journal noted. Also, MGX’s purchase of USD1 to close the deal sent a surge of capital to W.L.F., which, as long as Binance held onto the currency, the Trump company could invest in Treasuries and other safe securities to generate returns that Bloomberg estimated at about eighty million dollars a year.
An in-depth investigation by the Times, in September, pointed out that, two weeks after M.G.X. bought into Binance, the White House agreed to allow the U.A.E. to import hundreds of thousands of advanced computer chips that are used to train A.I. models, and which were subject to U.S. export restrictions. The Binance investment raised questions about the motivation of the U.A.E., an oil-rich Gulf kingdom, and about the Trump Administration’s security policies. But the most immediate beneficiary of the transaction was W.L.F. “We thank MGX and Binance for their trust in us,” the World Liberty C.E.O., Zach Witkoff, who is Steve’s son, said at a conference in Dubai.
Binance’s involvement with W.L.F. reportedly went beyond accepting USD1 as a means of payment and holding onto it. Bloomberg, citing three unidentified sources, reported that “Binance wrote the basic code to power USD1.” (A World Liberty spokesperson told the outlet that its report was “factually deficient.” A spokesperson for Binance said it followed “its standard listing process.”) The Journal reported on a partnership between W.L.F. and the crypto-trading platform PancakeSwap that was intended to boost adoption of USD1. PancakeSwap was created in 2020 by anonymous developers, who, according to the Journal, worked at Binance. The article also quoted Trevor Xu, a crypto entrepreneur based in Melbourne, Australia, who said, “The main narrative in the ecosystem is that Binance is supporting USD1.”
After Zhao’s clemency was announced, he posted on X, “Deeply grateful for today’s pardon and to President Trump for upholding America’s commitment to fairness, innovation, and justice. 🙏🙏🙏🙏” In July, Binance distanced itself from Zhao’s pursuit of a pardon, describing it to Bloomberg as a “personal” request. But, after Zhao had succeeded, a company statement hailed it as “incredible news” and thanked Trump “for his leadership and for his commitment to make the US the crypto capital of the world.”
In another era, the pardon and the financial dealings that preceded it would have sparked weeks of media coverage and congressional hearings. But, in the current maelstrom, there is a shocking headline every day, and the Republican Congress is in Trump’s pocket, which means the Democrats have their work cut out for them. Maxine Waters, the top Democrat on the House Financial Services Committee, described the pardon as a “payoff and a blatant example of the kind of pay-to-play corruption that Trump and his Administration continue to engage in.” Over in the Senate, Elizabeth Warren and Adam Schiff put forward a resolution to condemn the pardon, which would at least force their Republican colleagues to vote on it. So far, one of the only public rebukes from an elected Republican has come from Senator Thom Tillis, of North Carolina, who is not standing for reëlection next year.
Trump seems to have little to fear. Not only does he effectively control the legislature and the Justice Department; some legal experts say he has the Supreme Court and the Constitution (or, rather, his interpretation of it) on his side, too. Article II, Section 2 gives the President broad powers to grant pardons for federal crimes; the Court’s 2024 ruling in Trump v. United States granted him near-total immunity from prosecution for all his official acts. “It may be very difficult to rein him in,” Painter told me. “He thinks he is invincible.”
The larger lesson here is that the American political system isn’t equipped to deal with a rogue President, particularly when one party abrogates its responsibilities. In a number of cases, lower courts have challenged Trump’s action. But, from the Constitution and ethics laws to Congress and the Supreme Court, the checks and balances are failing. Trump knows this, and he is pressing his advantage. In the days before he issued a pardon to Zhao, it emerged that Trump is demanding more than two hundred million dollars in compensation from the Justice Department—from the American taxpayer, really—for various federal investigations that targeted him before he was reëlected. Also last week, demolition work began on the East Wing of the White House, where Trump is building a huge ballroom that he says will be funded in part by donations from corporations and wealthy individuals, many of which have a strong financial interest in staying on his good side. (According to the Administration, the donors include Apple, Amazon, Coinbase, Google, Lockheed Martin, Meta, and Microsoft.)
As Painter said, there has never been anything like this. Where Trump’s profiteering may lead is a question that cannot be answered purely in dollars and cents. ♦
