Binance Helped Trump's Crypto Firm Before CZ Sought Clemency

The Trump Family's Crypto Venture and Binance's Involvement

One of the Trump family’s cryptocurrency ventures has received significant behind-the-scenes support from the world's largest digital-asset exchange, whose founder is a convicted felon seeking a presidential pardon. This development highlights a complex web of relationships between high-profile individuals and major financial players in the crypto space.

Binance's Role in USD1 Development

According to three sources familiar with the matter, Binance provided the foundational code for USD1, a stablecoin launched by the Trumps’ World Liberty Financial Inc. These individuals requested anonymity due to the private nature of the arrangement. Later, Binance's founder and principal owner, Changpeng Zhao, publicly stated that he had applied for a presidential pardon. CZ, as he is known, pleaded guilty in 2023 to failing to maintain an effective anti-money-laundering program.

The coding work involved creating the "smart contract" that governs how USD1 tokens are created. This effort helped make USD1 available for use in a $2 billion transaction this spring when an investment firm founded by the United Arab Emirates used it to buy a stake in Binance. More than two months after that transaction, over $2 billion in USD1—roughly 90% of all coins outstanding—remains in Binance's wallets, according to blockchain data. The assets backing that sum generate interest income, which could reach tens of millions of dollars annually for the Trumps. Additionally, Binance promoted USD1 to its 275 million users, a valuable benefit for stablecoin issuers.

Unclear Compensation and Regulatory Implications

While Binance helped create, promote, and participate in the largest known transaction involving USD1, it remains unclear whether the company or Zhao received any payment from World Liberty. A Binance spokesperson did not respond to questions about the coding help or investment deal but stated that USD1 followed the exchange’s "standard listing process." She also noted that Zhao is no longer Binance’s chief executive officer and referred questions about his pardon application to him. Zhao has not responded to messages seeking comment.

A White House spokesperson declined to comment on the matter, while a spokeswoman for World Liberty denied specific questions about the company’s dealings with Binance, stating that the assertions were "factually deficient and designed to further a political agenda."

Conflict of Interest Concerns

Looming over Binance’s interactions with World Liberty are both firms’ most famous principals: Zhao, who seeks a pardon, and Trump, the only person who can grant it. Critics argue this situation creates a conflict of interest for the president. Richard Painter, a professor at the University of Minnesota Law School, highlighted the unprecedented nature of this scenario, noting that it is the first time since the Civil War that a president has faced such significant personal financial conflicts with official duties.

Previously, the White House has claimed that Trump has no conflicts of interest because he has placed his assets in a trust controlled by his eldest son, Donald Trump Jr. However, the president has stated he plays no role in business decisions or investments. An ethics agreement released before he took office in January says Trump will receive only "general business updates" about his main company, the Trump Organization, “and not an accounting of the performance of any specific business or asset.”

The Rise of Trump's Crypto Ventures

Trump, who once called Bitcoin a "scam," has shifted his stance, expressing hope to make the U.S. the "crypto capital of the world." His crypto ventures, including World Liberty and a memecoin announced days before his inauguration, have added at least $620 million to his fortune in a short span of months, according to the The News Pulse Billionaires Index. Meanwhile, his administration has scaled back enforcement cases against crypto companies that were pursued during former President Joe Biden’s administration.

Eric Trump, the president’s second-eldest son, has said he grew interested in cryptocurrency after banks began denying services to his family’s business. He described the experience as being "ostracized" and "come after," which led him to explore crypto.

Initial Meetings and Promotional Efforts

Neither World Liberty nor Binance has detailed how their collaboration began. Two people with knowledge of the matter said Zhao met with Steve Witkoff, one of World Liberty’s co-founders, in December, shortly after Trump’s election victory, at a Bitcoin conference in Abu Dhabi. By then, Zhao had been out of a federal halfway house in Long Beach, California, for less than three months, having served a short sentence after his guilty plea. His exchange paid more than $4 billion in penalties after authorities accused it of allowing money to "flow to terrorists, cybercriminals and child abusers through its platform."

A person close to Witkoff disputed the meeting, claiming Witkoff doesn’t remember it. Trump had tapped Witkoff, a real estate developer, to serve as a key diplomat in his administration. Witkoff has said he would exit World Liberty by transferring his interest to his adult sons, working with ethics officials and counsel to take all necessary legal steps to divest.

Stablecoins and Their Potential

Stablecoins like USD1 are intended to maintain a value of $1, backed by real assets such as cash or Treasuries. Promoters argue they can revolutionize international payments due to their low cost and speed. However, critics highlight their vulnerability to runs and note that some stablecoins have been linked to illicit activity. No such activity has been associated with World Liberty, which holds $2.1 billion in government money market funds, according to a recent attestation of its reserves.

Stablecoins can be highly profitable for their issuers, who earn interest on the assets backing them. Tether Holdings SA, the issuer of the world’s most popular stablecoin, reported $13 billion in profit last year.

Promotional Campaigns and Market Competition

When USD1 launched, World Liberty listed only one business partner: Palo Alto, California-based BitGo Inc., which provided the "underlying infrastructure and user experience" for minting and burning the stablecoins. A BitGo spokesperson declined to comment.

Soon after World Liberty announced its new stablecoin, the BNB Smart Chain, founded by Binance, included the new token in a broad promotion campaign offering zero transaction fees on trades. A Binance spokesperson said the campaign is designed "to promote stablecoins built on BNB Chain." A BNB Chain representative stated USD1 received no preferential treatment.

Regulatory Developments and Future Outlook

A recent regulatory filing by Circle Internet Group Inc., another stablecoin issuer, suggests the value of promotional help. It revealed that Circle paid Binance $60 million upfront to promote its coin, USDC, and agreed to share future revenue with the exchange. Under the two-year deal, Binance also agreed to hold USDC in its company treasury.

World Liberty’s new stablecoin initially faced slow growth, according to blockchain data, which is unsurprising given the competitive landscape. However, by May, Zhao was involved in the biggest known use of USD1 yet when the UAE-founded investment firm MGX used the stablecoin to purchase a $2 billion stake in Binance.

This surprising move caught Circle executives off guard, as they expected their stablecoin to be chosen. Using World Liberty’s coin meant Binance lost out on revenue sharing that was part of its promotional deal with Circle, according to those familiar with the matter.

Zhao later posted on X that determining which currency to use in transactions is "mostly at the choice of the payer." MGX did not respond to a request for comment.

Binance wallets still hold over $2 billion of USD1. At that amount, even a 4% yield would generate $80 million annually. Under the terms of the World Liberty’s prospectus, the Trump family would be entitled to about $30 million of it.

Meanwhile, Zhao’s relationship with U.S. regulators has improved. In May, the Securities and Exchange Commission dropped a lawsuit against Binance that had been filed in June 2023, one of several crypto-focused enforcement actions the regulator has either abandoned or paused. The SEC had accused the exchange of lying to regulators about its operations in the U.S. The lawsuit quoted Binance’s former chief compliance officer texting a colleague, “We are operating as a fking unlicensed securities exchange in the USA bro.” The SEC said it was dropping the case "in the exercise of its discretion and as a policy matter."