Is Trump’s pardon of Binance boss Changpeng Zhao a conflict of interest?

Changpeng Zhao, the owner of the largest cryptocurrency exchange in the world, was pardoned by US President Donald Trump last year for using his platform to launder money connected to child sex abuse, “terrorism,” and drug trafficking. Zhao was the subject of a legal order last year.

White House press secretary Karoline Leavitt claimed in a statement on Thursday that Trump “exercised his constitutional authority by issuing a pardon for Mr. Zhao, who was a Biden Administration prosecutor in their cryptocurrency war.”

Binance and Zhao have a frank relationship with the crypto companies owned by the Trump family. Some people see the president’s pardon of Zhao as a conflict of interest because of this. Robert Reich, a former labor secretary and economist, described Trump’s action as a “Pay-to-Pardon Scheme.”

Zhao responded to the announcement by saying, “Deeply grateful for today’s pardon and to President Trump for upholding America’s commitment to justice, innovation, and fairness.” Following Trump’s decision, a Binance-related token, BNB, increased by 8%.

What crimes did Zhao commit?

After serving a four-month sentence for breaking the US Bank Secrecy Act, Zhao was released from prison in September 2024. He was the first person to violate the 1970 law, which was enacted, and serve time in prison for it.

Financial institutions must be aware of their customers, keep an eye on their transactions, and file reports on suspicious customer behavior in accordance with the law. No one has ever broken the law in the way that Zhao did between 2017 and 2024, according to the prosecution.

The judge for the Western District of Washington said in his ruling that Zhao’s choice to ignore any US banking regulations that appeared to have impacted Binance’s expansion had disturbed him. According to prosecutors, Zhao’s approach to US law was “better to ask for forgiveness than to grant permission.”

During the course of seven years, prosecutors claimed Binance had facilitated roughly $900 million in virtual currency trades, including those involving al-Qaeda and Iran.

Additionally, according to investigators, Binance was used to transfer and exchange illicit funds in secret by drug traffickers and networks linked to child sexual exploitation. They claimed that the exchange became a hub for illegal operations because of its weak customer verification system and tolerance for high-risk transactions.

Zhao, 47, pleaded guilty to one count of failing to stop money-laundering at his business in November 2023, and was prohibited from operating in the US. Additionally, the company consented to pay $4.3 billion to settle other Department of Justice allegations.

Zhao told the court during sentencing last year, “I failed here.” “I’m sorry for my mistakes, and I regret them.”

Before his family immigrated to Canada following the 1989 Tiananmen Square massacre, Zhao was raised in rural China. He continued to study computer science at McGill University in Canada as a teenager because of his fascination with the technology sector. In 2017, he cofounded Binance.

The pardon will remove the restrictions that Zhao was unable to resume his ventures in the US. It might help him in particular to return to Binance, which has been around since Zhao’s arrest.

He is best known for founding FTX, the second-largest crypto exchange in the world before it collapsed in 2022, alongside Sam Bankman-Fried, who was the original archrival. Bankman-Fried was found guilty of extorting customer funds worth $10 billion and given a 25-year prison term.

Trump pardoned Zhao, but why?

At a White House briefing on Thursday, Trump claimed that “many people said he wasn’t guilty of anything.” They claim that he was not guilty of anything and that he spent four months in jail. He added that he had been told that what he did was not even a crime had been done.

Trump responded, “I granted him a pardon at the request of a lot of very good people.”

The White House counsel’s office “thoroughly reviewed” the request, according to Karoline Leavitt, White House press secretary, who announced the pardon.

Leavitt claimed that Trump “wants to correct this overreach” and that the administration of former president Joe Biden was “very hostile to the cryptocurrency industry” in Zhao’s case.

How does Trump view the crypto industry?

Trump pledged to approach the crypto industry with more friendliness than his predecessor during his campaign for president last year. He received significant campaign contributions from cryptocurrency traders.

Trump has relaxed regulations in the sector since taking office in 2025, sought to establish a national cryptocurrency reserve, and disbanded the government’s crypto-related enforcement team.

The White House has just recently granted clemency to convicted crypto-entrepreneurs in the US with Zhao’s pardon. Justin Sun, a crypto entrepreneur with ties to World Liberty Financial, was the subject of a fraud investigation by the Trump administration in February. Trump has also pardoned the co-founders of the US Bank Secrecy Act, who were facing charges in 2022.

However, Joe Lonsdale, cofounder of Palantir, a data software company, reported on X on Thursday that while he had backed Trump, the president had been “terribly advised” regarding recent pardons. He claimed that it gives the impression that there is a lot of fraud going on in this area.

Democratic Senator Elizabeth Warren also criticized the president’s handling of Zhao’s case in a statement as a “kind of corruption.” She has been outspoken about her criticism of the president’s connections to the crypto industry.

Does this represent a conflict of interest?

Trump’s pardon of Zhao is in conflict of interest, according to his critics. According to Robert Reich, an economist and former labor secretary under President Bill Clinton, the pardon “comes after Zhao helped boost the Trump family’s crypto business,” and it is an “example of Trump’s Pay-to-Pardon scheme.”

Changpeng Zhao, a billionaire crypto mogul and Binance founder, both admitted to being guilty to money laundering charges under Trump’s pardon.

Zhao helped expand the Trump family’s crypto business, which Zhao did not.

The Pay-to-Pardon Scheme, which Trump has just introduced, is just the most recent example. pic. twitter.com/WS6vZEsxZB

The president and his family have close ties with Binance, and they own a crypto company called World Liberty Financial.

World Liberty Financial launched its own “stablecoin” in March 2025, a dollar-pegged cryptocoin supported by US treasuries called USD1. This was distributed using the decentralized, digital ledger blockchain used by Binance. Binance also promoted USD1 to its 275 million users.

Additionally, MGX Fund Management Limited, an investment fund in the United Arab Emirates, used $ 2 billion worth of World Liberty stablecoin to purchase a stake in Binance.

The Trumps could make tens of millions of dollars from that deal, the New York Times claims. However, according to previous White House statements, Trump and Binance have no conflicts of interest because they are not under his control.

Source: Aljazeera