Trump pardons Binance founder Changpeng Zhao

Changpeng Zhao, the founder of Binance, the world's largest cryptocurrency exchange, enters the Federal Courthouse in Seattle, April 30, 2024. (Ellen M. Banner/The Seattle Times via AP)

WASHINGTON — U.S. President Donald Trump has pardoned Binance founder Changpeng Zhao, who created the world’s largest cryptocurrency exchange and served prison time for failing to stop criminals from using the platform to move money connected to child sex abuse, drug trafficking and terrorism.

The pardon caps a monthslong effort by Zhao, a billionaire commonly known as CZ in the crypto world and one of the biggest names in the industry. He and Binance have been key supporters of some of the Trump family’s crypto enterprises.

“Deeply grateful for today’s pardon and to President Trump for upholding America’s commitment to fairness, innovation, and justice,” Zhao said on social media Thursday.

Zhao served four months in prison after reaching a deal with the Justice Department to plead guilty to charges of enabling money laundering at Binance. But, in explaining the pardon, Trump said of Zhao, “He was recommended by a lot of people.”

“A lot of people say that he wasn’t guilty of anything,” Trump said. “He served four months in jail and they say that he was not guilty of anything.”

The U.S. president added that he didn’t believe he’d ever met Zhao personally, but had “been told” he “had a lot of support, and they said that what he did is not even a crime.” He said Zhao had been “persecuted by the Biden administration.”

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

It’s the latest move by a president who has flexed his executive power to bestow clemency on political allies, prominent public figures and others convicted of crimes.

White House press secretary Karoline Leavitt announced the pardon in a statement and later told reporters in a briefing that the White House counsel’s office “thoroughly reviewed” the request. She said the administration of Democratic U.S. President Joe Biden pursued “an egregious oversentencing” in the case, was “very hostile to the cryptocurrency industry” and Trump “wants to correct this overreach.”

The crypto industry has also long complained it was subject to a “regulation by enforcement” ethos under the Biden administration.

Trump’s pardon of Zhao fits into a broad pattern of his taking a hands-off approach to an industry that spent heavily to help him win the election in 2024. His administration has dropped several enforcement actions against crypto companies that began during Biden’s term and disbanded the crypto-related enforcement team at the Justice Department.

Former federal prosecutor Mark Bini said Zhao went to prison for what “sounds like a regulatory offense, or at worst its kissing cousin.”

“So this pardon, while it involves the biggest name in crypto, is not very surprising,” said Bini, a white collar defense lawyer who handles crypto issues at Reed Smith.

Zhao was released from prison last year after being sentenced for violating the Bank Secrecy Act. He was the first person ever sentenced to prison time for such violations of that law, which requires U.S. financial institutions to know who their customers are, to monitor transactions and to file reports of suspicious activity. Prosecutors said no one had ever violated the regulations to the extent Zhao did.

The judge in the case said he was troubled by Zhao’s decision to ignore U.S. banking requirements that would have slowed the company’s explosive growth.

“Better to ask for forgiveness than permission,” was what Zhao told his employees about the company’s approach to U.S. law, prosecutors said. Binance allowed more than 1.5 million virtual currency trades, totaling nearly US$900 million, that violated U.S. sanctions, including ones involving Hamas’ al-Qassam Brigades, al-Qaida and Iran, prosecutors said.

“I failed here,” Zhao told the court last year during sentencing. “I deeply regret my failure, and I am sorry.”

Zhao had a remarkable path to becoming a crypto billionaire. He grew up in rural China and his family immigrated to Canada after the 1989 Tiananmen Square massacre. As a teenager, he worked at a McDonald’s and became enamored with the tech industry in college. He founded Binance in 2017.

In addition to taking pro-crypto enforcement and regulatory positions, the U.S. president and his family have plunged headfirst into making money in crypto.

A stablecoin launched by World Liberty Financial, a crypto project founded by Trump and sons Donald Jr. and Eric, received early support and credibility thanks to an investment fund in the United Arab Emirates using $2 billion worth of World Liberty’s stablecoin to purchase a stake in Binance. Stablecoins are a type of cryptocurrency that are typically tied to the value of the U.S. dollar.

A separate World Liberty Finance token saw a huge spike in price on Thursday shortly after news of the pardon was made public, with gains that far outpaced any other major cryptocurrency, according to data from CoinMarketCap.

Zhao said earlier this year that his lawyers had requested a pardon.

It is not immediately clear what impact Trump’s pardon of Zhao may have on operations at Binance and Binance.US, a separate arm of the main exchange offering more limited trading options to U.S. residents.

By Will Weissert And Alan Suderman.

Suderman reported from Richmond, Va.