Binance co-founder denies stablecoin link to Trump firm, threatens legal action

Binance co-founder and former CEO Changpeng “CZ” Zhao has strongly denied a recent report that linked him to a stablecoin issued by World Liberty Financial (WLF), a company associated with former US President Donald Trump. Zhao, in a post on X, described the report as a “hit piece” filled with “so many factual errors” and threatened legal action for defamation. The report in question, which claimed that Binance developed the original smart contract code for USD1, a stablecoin issued by WLF, has sparked a heated response from Zhao. He also alleged that the report was sponsored by a competitor, further fueling the controversy.

The report suggested that Zhao applied for a presidential pardon shortly after USD1 was used in a $2 billion deal involving a UAE-based fund’s investment in Binance. It also mentioned that more than 90% of USD1’s tokens reportedly remain in Binance wallets, potentially generating tens of millions in annual interest revenue. Zhao’s response to the report was swift and decisive, referencing a previous legal dispute with the publication. In July 2024, the publication’s Chinese-language edition retracted a 2022 article accusing Binance of operating a Ponzi scheme, calling the headline “false and baseless.” At the time, the publication agreed to make a charitable donation instead of paying damages.

Zhao’s legal troubles are not new. He pleaded guilty to one felony count as part of a settlement with US authorities in 2023. Although he had already served four months in prison, he said in May that he was seeking a presidential pardon from Trump. Such a pardon could potentially allow Zhao to return to a managerial or operational role at a US crypto business. Trump’s crypto ventures, including World Liberty Financial, his official memecoin, and crypto executive campaign contributions, have attracted scrutiny from US lawmakers since before he took office.

The controversy surrounding Zhao and the stablecoin report comes at a time when Republican leaders in the House are set to consider three crypto bills, including the GENIUS Act, which regulates payment stablecoins. The bill passed the Senate with bipartisan support despite initial Democratic opposition due to Trump’s crypto interests. This development adds another layer of complexity to the ongoing debate over cryptocurrency regulation and its potential impact on the financial landscape.

Zhao’s response to the report also highlighted his previous disputes with other media outlets. In April, he dismissed a report that claimed he had agreed to provide evidence against Tron founder Justin Sun as part of a plea deal with the United States Department of Justice. Zhao’s tweets have consistently portrayed him as a victim of media smear campaigns, further complicating his public image and the perception of Binance in the crypto community. The ongoing legal and public relations battles underscore the challenges faced by high-profile figures in the cryptocurrency industry, where scrutiny and controversy often go hand in hand.