Binance Helped Trump's Crypto Firm Before Billionaire Founder's Pardon
The Rise and Redemption of Changpeng Zhao
Changpeng Zhao, often referred to as the richest man in the crypto world, made a return to his secluded neighborhood in Abu Dhabi a year ago after being released from a California jail. This area, known for its luxurious $30 million villas on a white-sand island, became his refuge. During this time, Zhao focused on kite-surfing, socializing with friends at beachside clubs, and maintaining his 100-foot yacht, Da Moon, which remained moored nearby.
Despite his newfound freedom, Zhao's company, Binance, was facing significant challenges. The exchange, now under the control of U.S. authorities, was undergoing a transformation to eliminate the practices that had previously allowed it to function as a money-laundering hub. Binance’s top legal team believed the company was on the brink of collapse.
A New Opportunity with Trump
As Donald Trump's presidential campaign gained momentum, Zhao saw an opportunity. His representatives began discussions with Trump allies, aiming to find a solution to Binance’s legal issues in the U.S. They proposed a deal involving a Trump family business, according to those familiar with the talks.
After Trump's victory, Binance formed a high-level task force to negotiate a deal with World Liberty Financial, a Trump family venture. This collaboration aimed to secure clemency for Zhao. In the spring, Binance took steps that significantly boosted the credibility of World Liberty’s stablecoin product, USD1, increasing its market capitalization from $127 million to over $2.1 billion.
The Pardon and Its Implications
Trump granted Zhao a presidential pardon, likely paving the way for Binance to return to the U.S., where it had been banned after pleading guilty in 2023 to violating anti-money-laundering rules. At the time, the government claimed Zhao had caused "significant harm to U.S. national security" by allowing sanctioned Iranian crypto exchanges, Russian drug-traffickers, Hamas militants, and other criminal groups to move billions of dollars through the exchange.
This pardon marked a significant instance of Trump using his office to benefit someone at the center of deals that have enriched his family. Ahead of the launch of USD1, Binance deployed a team of over a dozen engineers to build the technology behind the currency. Binance then struck a deal for an Emirati state investor to buy a minority stake in Zhao’s crypto exchange, with the $2 billion purchase price paid using USD1.
The Impact on World Liberty
The use of USD1 greatly enhanced World Liberty’s market cap, giving it new clout. This helped in the sales of its other cryptocurrency, WLFI, which has a fluctuating value on the market. World Liberty’s business partners cited the success of its stablecoin as a reason to invest in WLFI. Over the past year, World Liberty generated about $1.4 billion in revenue from WLFI sales, far exceeding the annual earnings of the president’s real-estate portfolio.
World Liberty’s website states that the company is about 40% owned by a Trump family entity entitled to three-quarters of the company’s revenue from those sales. However, representatives for World Liberty denied any involvement in the pardon, stating that the company had never discussed it.
Binance’s Strategic Moves
Binance’s deployment of engineers and its involvement in the Emirati deal haven’t been previously reported. The company also engaged in strategic moves to improve its standing in the U.S. and abroad. Zhao embarked on a world tour to encourage foreign leaders to introduce more favorable crypto regulations, meeting with officials in Pakistan and other countries.
In the U.S., Binance ramped up its lobbying efforts, hiring four U.S. lobbying firms this year, spending about $800,000 on lobbying in the first nine months of this year. These efforts were aimed at securing a pardon and influencing crypto policy.
The Future of Binance
Zhao’s fortunes improved significantly after the pardon, with Binance’s BNB cryptocurrency gaining value through U.S. investor money. The so-called crypto-treasury strategy, where publicly listed companies issue shares and debt to fund the purchase of certain cryptocurrency, has been a hot trend on Wall Street.
As Binance continues to navigate the complexities of the crypto industry, Zhao’s return to prominence highlights the evolving landscape of digital finance. With the potential for renewed operations in the U.S., Binance is poised to reclaim its position as a leading player in the global crypto market.
Post a Comment