In an unforeseen turn of events, Changpeng Zhao—founder of the world’s largest cryptocurrency exchange Binance—has received a full presidential pardon. This was indeed an unexpected decision by former President Donald Trump. Zhao’s recent guilty plea on money laundering charges related to the exchange was a major admission. This historic breakthrough occurred late in 2023. Broader regulatory concerns regarding cryptocurrency—including allegations of fraud and market manipulation—had led the Biden administration to put Zhao’s activities under a microscope for years.
Zhao pled guilty in exchange for a settlement with the Justice Department. Instead of probation, they suggested a prison term of 12 to 18 months. The court, when handing down their sentence, chose to augment that four-month imprisonment with a $50 million fine! The plaintiff’s plea agreement contained an unambiguous condition. Zhao, also known as “CZ,” won’t continue as an executive at Binance.
Legal Troubles and Guilty Plea
Zhao’s legal troubles started when the U.S. sued Binance for allegedly allowing criminals to wash their money through the exchanges. According to media reports, as much as $900 million in transactions routed through Binance were made between the U.S. and Iran. In particular, the Biden administration expressed concern with these activities. This was all the more true after its much celebrated and high-profile prosecution of Sam Bankman-Fried, founder of FTX.
Zhao wasn’t deterred by the daunting charges she faced. He fought and won a plea agreement from the Justice Department, obtaining a massive financial settlement of $4.3 billion. This deal enabled him to plead guilty and serve much less time in prison overall.
The Pardon and Its Implications
President Trump’s recent pardon of the above ignitor has sent shockwaves through the political and financial sectors. In a joint statement, Karoline Leavitt, one of the plaintiffs, praised the weight of this ruling.
“President Trump exercised his constitutional authority by issuing a pardon for Mr. Zhao, who was prosecuted by the Biden Administration in their war on cryptocurrency.” – Karoline Leavitt
This announcement underscores the continued friction between cryptocurrency proponents and regulatory agencies. The political implications of the pardon The pardon doesn’t just exonerate Zhao, it highlights the deep political divide over the governance of cryptocurrency in the United States.
A Changing Landscape for Cryptocurrency
Zhao’s case highlights how things have changed in the world of crypto, particularly as regulatory pressures ramp up. The Biden administration’s focus on digital currencies has become increasingly pronounced, with Zhao’s conviction serving as a notable example of enforcement actions against prominent figures in the industry.
Zhao announcement that he will reduce his role at Binance. This points to larger questions about the future direction of the exchange and whether or not it can pivot to meet regulatory requirements. Investors and stakeholders alike will be keenly watching the effects of this pardon on Zhao’s legacy. More importantly, they’ll see how it impacts Binance’s business practices in a confusing regulatory landscape.
