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After Donald Trump pardoned a billionaire crypto king on Thursday, he claimed that Binance founder Changpeng Zhao was “persecuted” by Joe Biden’s Justice Department as part of what the White House called a “war on cryptocurrency.”
On one level, that assertion was an attempt to explain away a pardon that many see as a naked quid pro quo with a man whose business used Trump’s crypto tokens in a transaction that benefited the president’s family firm.
On another level, observers say, that claim is simply wrong. Zhao willingly pleaded guilty under a carefully negotiated deal with former Attorney General Merrick Garland’s Justice Department, which ultimately saw his company pay $4 billion in fines and serve only four months in prison. At the time, one analyst saw the overall package as a clear “victory” for Binance and Zhao.
There’s a sense of bitter irony for longtime critics of Biden Justice Department. They had long complained in general about Biden’s approach to corporate crime, and Binance in particular was accused of facilitating everything from terrorism to child sexual abuse images before it received a deal that allowed its founder to spend a few months in prison.
“Biden is certainly not anybody to hold up as an exemplar of people ‘persecuting’ people,” said Bart Naylor, a financial policy advocate with the nonprofit group Public Citizen.
Choosing Club Fed
Progressive critics have maintained a drumbeat of criticism of Biden and Barack Obama’s Justice Departments ever since the Great Recession, when top bankers avoided jail time for their role in the housing market crash.
Prosecutions of corporate criminals fell to a record low during Biden’s final year in office, according to a report released by Public Citizen earlier this year.
Binance was one of the thinning ranks of companies to find itself in court, but critics say it may be the exception that proves the rule. Three years ago, it was one of the leading cryptocurrency exchanges in the world, as it effectively thumbed its nose at U.S. anti-money-laundering laws designed to prevent terrorists, drug traffickers, and other criminals from making their dirty money look clean.
In statements around the time of the November 2023 plea deal, Biden Justice Department officials laced into Zhao. Still, the deal they crafted allowed Binance to remain one of the leading players in the field.
Unlike the bankers who escaped jail time, Zhao was the rare executive to see the inside of a prison’s walls, but not for long.
Prosecutors sought a three-year sentence for Zhao, but a federal judge dipped below that request to hand him the monthslong term. He served his time at a low-security prison in California. Since then, he has returned to serving as something of an oracle to crypto industry fanboys, who generally refer to him by his nickname CZ.
“If you consider how seriously the establishment of both political parties takes issues like terrorism, I think a four-month prison sentence is comically inadequate.”
“If you set the bar at response to the great financial crisis, then yeah, bar cleared. It was more than was common in the past,” said Jeff Hauser, executive director of the left-leaning nonprofit Revolving Door Project. “But if you consider how seriously the establishment of both political parties takes issues like terrorism, I think a four-month prison sentence is comically inadequate.”
Even at the time of the settlement, observers believed that it might not dent Binance’s business by much.
“While the massive penalty is a blow to the company’s treasury and the humbling of Zhao undercuts Binance’s longtime edge, the early market response suggests the company will survive,” Fortune magazine intoned shortly after the deal was announced. As of this quarter, Binance is still the world’s largest cryptocurrency exchange.
Nevertheless, Trump has cast the prosecution has a grave overreach by the Biden administration that he had to correct.
“It wasn’t a crime, that he was persecuted by the Biden administration, and so, I gave him a pardon at the request of a lot of very good people,” Trump said.
“Unparalleled, Open Corruption”
During and after the Biden administration, cryptocurrency insiders painted a dark portrait of regulators’ attempts to place guardrails on the industry in the wake of FTX founder Sam Bankman-Fried’s far-reaching fraud. They complained about relentless attention from agencies ranging from the Securities and Exchange Commission to the Justice Department.
The idea that the Biden administration was single-mindedly focused on crushing crypto is absurd, Hauser said. At most, Hauser argued, the SEC under former Chair Gary Gensler was generally skeptical of the industry.
“The Garland Justice Department did not, and nor did the Yellen Treasury Department, or other aspects of the national security state, never sought to delegitimatize crypto and tie it strongly to terrorism,” Hauser said. “If they had told that story repeatedly, I think the reputation of crypto may have been very different, and that might have impacted at a minimum how Trump chose to be corrupt in this administration.”
Since Trump’s inauguration, he has sought to rapidly reverse perceptions of the federal government’s attitude toward crypto. He has pardoned crypto executives and even a crypto company itself, in an apparent first. In addition to cheerleading crypto’s growth, moreover, he and his family have jumped headlong into crypto schemes themselves, relying on various ventures to rapidly boost Trump’s net worth.
Trump directly tied his pardon of Zhao to the Biden administration’s “war on cryptocurrency.” In doing so, he also pardoned a man whose business is linked with his.
“Zhao helps the Trumps make billions and gets a pardon.”
In May, an investment fund created by Abu Dhabi’s sovereign wealth fund used the Trump family’s stablecoins to invest in Binance, effectively allowing the Trump family to reap the benefits of a large transaction relying on its token.
Frank Bowman, a University of Missouri law professor who studies pardons, said that if reporting on the financial ties between Binance and Trump’s business ventures is accurate, “the pardon is perhaps the most overtly corrupt in American history. Zhao helps the Trumps make billions and gets a pardon. With Trump, one has already almost exhausted the superlatives. But this is unparalleled, open corruption.”
