According to a report in the Wall Street Journal, Changpeng Zhao, the world's richest cryptocurrency entrepreneur, returned to a secluded community of $30 million villas a year after his release from a California prison. The community is located on a white sand island. He practices kitesurfing, meets with friends at a beach club, and has his 100-foot yacht, "Da Moon," moored nearby. Despite his newfound freedom, things are not looking good. Binance, the cryptocurrency exchange founded by Zhao, is facing difficulties. New regulators are stepping up their crackdown, eliminating practices that once turned Binance into a large-scale money laundering machine. Binance's senior legal staff are convinced the company's future is bleak. [Screenshot from Wall Street Journal report] However, Donald Trump's strong presidential campaign has presented an opportunity for Changpeng Zhao. According to sources, during the election campaign, Zhao's representatives began contacting Trump's allies, expressing a desire to find a way to resolve Binance's legal difficulties in the United States and proposing a business deal with the Trump family. Following Trump's election victory, according to other sources familiar with the matter, Binance established a senior task force to reach an agreement with World Liberty Financial, a newly established cryptocurrency company by the Trump family, in hopes of securing a pardon for Changpeng Zhao. This spring, Binance took a series of actions to rapidly promote the stablecoin products of this emerging Trump family company, enhancing its market credibility and causing its market capitalization to surge from $127 million to over $2.1 billion. Last week, Trump pardoned Changpeng Zhao, paving the way for the world's largest cryptocurrency exchange, which had previously been banned from operating in the United States, to return to the US. Previously, Binance was forced to withdraw from the US market after admitting to violating anti-money laundering regulations in 2023. At the time, the US government stated that Changpeng Zhao posed a "significant threat to US national security" because he allowed sanctioned Iranian cryptocurrency exchanges, Russian drug traffickers, Hamas militants, and other criminal organizations to transfer billions of dollars through the exchange. According to sources familiar with the matter, prior to the "World Free Finance" plan to launch its USD1 stablecoin pegged to the US dollar in March, Binance deployed a team of more than ten engineers to build the underlying technology for the cryptocurrency. Subsequently, Binance reached an agreement with a UAE state-owned investor to purchase a portion of Binance's equity. According to sources, Binance demanded that this $2 billion transaction be settled in USD1. The use of USD1 has significantly boosted the development of World Free Finance, leading to a substantial increase in its market capitalization and new influence. This, in turn, has driven sales of its other cryptocurrency, WLFI, which fluctuates in price on the market. Some of the company's business partners cite the success of its stablecoin as a key reason for investing in WLFI. Over the past year, World Free Finance has earned approximately $1.4 billion from the sale of WLFI, far exceeding the returns from any single year of Trump's real estate portfolio. The company's website states that approximately 40% of the shares are held by an entity within the Trump family, which is entitled to three-quarters of the proceeds from such sales. Details of Binance sending engineers to participate in the settlement of this UAE transaction were previously unreported. Representatives from World Freedom Finance stated that the company never discussed the pardon. Tom Clare, the lawyer representing the company, said that World Freedom Finance never assisted, mediated, or exerted influence in Trump's decision to pardon Changpeng Zhao. However, company spokesperson Gail Gitcho stated that the company supports the pardon. "Everyone who has become a victim of Joe Biden's political and legal persecution deserves a pardon," she said. Gijo also pointed out that Changpeng Zhao (known in the industry as "CZ") is not an investor in World Free Finance (WLFI) and denied that Binance had ever been involved in arranging for MGX—the UAE state-owned investor that purchased Binance shares—to trade using USD1. "CZ has never invested a single penny in WLFI," Gijo said. She described the relationship as "like any ordinary business using a cryptocurrency exchange." "The relationship between World Free Finance and Binance is like that between an ice cream factory and a milk supplier," she said. Binance's lawyer, Wayne F. Dennison, stated that there was no wrongdoing involved. He pointed out that since Binance is the world's largest cryptocurrency exchange, almost any crypto project inevitably has some form of business dealings with it. Dennison stated that Binance "does not control the stablecoin chosen by MGX," and added that neither Binance nor Changpeng Zhao acted as a matchmaker or funder for "world free finance." White House Press Secretary Karoline Leavitt stated, "The President and his family have never, and will never, engage in any conflict of interest." Trump stated last week that Changpeng Zhao had been "persecuted by the Biden administration," and that his pardon was "at the request of many very good people." According to sources familiar with the matter, Steve Witkoff, President Trump's special envoy who co-founded World Freedom Finance last fall with his son Zach and the Trump family, recently expressed "full confidence" in Zhao Changpeng's pardon. However, a government official denied this claim. Gijo stated that Steve Witkoff "never had any operational control over World Freedom Finance." According to sources, the timing of the pardon surprised some government officials. Some officials had worried that pardoning the head of a foreign company convicted of serious anti-money laundering violations would have a negative image and could encourage others to follow suit. However, a White House official denied that the pardon caused any surprise. According to sources familiar with the Justice Department's internal thinking, some officials believe a pardon is unlikely because it wouldn't be in the U.S. interest in allowing Binance back into the country. This pardon marks Changpeng Zhao's successful escape from "persona non grata" status, restoring him to his position as an industry leader sought after by politicians worldwide, with even greater wealth than before. This could also help Binance resume operations in the U.S.—once one of its largest markets, contributing a third of the company's billions of dollars in annual revenue. Since last year, Binance has been overseen by the U.S. Department of Justice and the Treasury Department to ensure its exit from the U.S. market and compliance with anti-money laundering laws. According to sources familiar with the matter, the Department of Justice's oversight may be nearing its end, but the Treasury Department's oversight program is expected to continue until 2029. The Department of Justice and the Treasury Department declined to comment. Some sources indicated that Binance has been gradually withdrawing from oversight. In March of this year, the company wrote to Treasury officials requesting the end of oversight and has delayed or even obstructed requests from regulators to access internal records and interview employees. Binance lawyer Dennison stated, "Binance and its legal team are always committed to complying with all legal requirements in an honest and transparent manner." In fact, prior to the amnesty, Changpeng Zhao's business empire had already made renewed progress in the United States. Binance's proprietary cryptocurrency, BNB, has gained access to the US investor market through a US-listed company, a trend that has helped Zhao's net worth double in the past year, reaching at least $80 billion. "What exactly happened?" According to interviews with crypto podcasts and other media outlets after his release from prison, Changpeng Zhao recalled that while serving time at the Lompoc Federal Prison in California, he shared cell number 5 with a double murderer who snored loudly. It was then that he began to consider his future under a potential Trump administration. Zhao was sentenced to four months in prison for admitting in late 2023 that he had failed to maintain effective anti-money laundering compliance and resigned as CEO of Binance. According to the US indictment, Binance's chief compliance officer told colleagues that Zhao did not want the exchange to verify user identities, claiming that his customers "came to commit crimes." Prosecutors also stated that Changpeng Zhao had told his employees, "It's better to apologize afterward than to ask for permission beforehand." As part of the plea agreement, Zhao agreed to no longer participate in the day-to-day management of Binance, and U.S. authorities imposed a record $4.3 billion fine on Binance. In a later interview, Zhao mentioned that during his imprisonment in Lompoch, he organized study groups to teach fellow inmates about cryptocurrency and was even asked for trading advice by prison guards. Halfway through his sentence, he was surprised to see on television news that Trump had publicly expressed support for cryptocurrency at a Bitcoin conference in Nashville during his campaign, completely reversing his previous skepticism. “I was sitting in jail, thinking, ‘What the hell is going on?’” Changpeng Zhao said in an interview. In another interview, he added, “Obviously, he’ll be a good friend to our industry, and a good thing for those I think have been unfairly accused.” He was released from prison last September to a strange new world—cryptocurrency has become a political hotspot, a stark contrast to the Biden administration’s crackdown on the industry through regulation, litigation, and criminal investigations. Back in Abu Dhabi, Zhao lives with his partner, Binance co-founder Yi He, and their children. He posted on social media that he needs some time to think about his next steps. A month later, he cautiously took the stage at a Binance event in Dubai, stating that he wanted to stay away from politics and that the plea agreement must be respected. However, he also pointed out, "Everything changes. Agreements can be replaced by new agreements. Governments change." The atmosphere within Binance, however, became somber. Although the exchange still boasts approximately 250 million global users, its market share in the crypto trading market has fallen to its lowest point in nearly four years, according to research firm CCData. The US regulatory team—especially the lawyers from the New York-based law firm Sullivan & Cromwell, appointed by the Treasury Department—continued to press company executives to question employees, strengthen client vetting, and review billions of dollars in past transactions. Binance's legal team believed that US authorities would ultimately impose harsher penalties for the company's lack of cooperation. Zhao Changpeng's criminal case has also hampered Binance's expansion plans in Europe and its application for new licenses in the UAE and other regions. Binance Special Task Force Trump announced the establishment of "World Free Finance" in September 2024, stating its goal was to make "America the global cryptocurrency capital." According to the company's founding documents, its purpose is to promote the adoption of dollar-backed cryptocurrencies (i.e., stablecoins) to maintain the dollar's dominance. The project raised $20 million in its first month through the sale of WLFI. “Nobody believed us at first,” Zach Witkov said at a recent conference. He recalled that some people in the crypto world ridiculed the company as “a joke” last year. According to sources, an internal special team led by Richard Teng, the successor to CEO Changpeng Zhao, is exploring ways to inject funds into the Trump family business. This is inspired by crypto billionaire Justin Sun’s announcement last November after the election that he would purchase $30 million worth of WLFI tokens from World Free Finance. The U.S. Securities and Exchange Commission subsequently suspended its fraud investigation against Sun. Sun’s spokesperson previously stated that his investment decision was “not politically motivated.” According to sources, Binance did not directly purchase the tokens but instead sent a team, including its Hong Kong stablecoin head, to develop blockchain technology for USD1. World Free Finance spokesperson Gijo stated that Binance provided the company with so-called "smart contracts"—the core rules for stablecoins to operate on the blockchain—"to avoid redundant development for WLFI; it was purely technical assistance and did not involve any exchange conditions." In October 2024, World Free Finance hired Rich Teo, a close friend of Changpeng Zhao and former head of Binance's stablecoin project. The project was shut down two years prior due to an order from New York regulators. Teo did not respond to requests for comment. Gijo stated that Teo's hiring was unrelated to Changpeng Zhao. According to sources, in early December last year, Changpeng Zhao and his partner He Yi hosted a party on a yacht docked near the Abu Dhabi Grand Prix circuit, entertaining important Binance clients and several well-known guests, including Elon Musk's father, Errol Musk. Pakistani tech entrepreneur Bilal bin Saqib, who later became an advisor to "World Free Finance," was also on the guest list. Guests danced on the deck to DJ and saxophone music, while F1 cars roared past. A few days later, Zhao appeared alongside Eric Trump and Steve Witkov at a Bitcoin conference in the same city. Following the meeting, an informed source revealed that Trump's appointed White House envoy, Vitkov, had inquired with individuals close to the U.S. regarding the Zhao Changpeng case. Gijo stated that Eric Trump had met with Zhao Changpeng several times before, but said, "We understand that neither Steve nor Eric met with CZ at the conference." A government official denied that Vitkov met with Zhao Changpeng or inquired at the conference. White House spokeswoman Anna Kelly also refuted claims of a conflict of interest regarding Vitkov. Meanwhile, according to a previous report by the Wall Street Journal, representatives of the Trump family (including Vitkov) had contacted Binance representatives to discuss potential transactions, including the acquisition of shares in Binance's U.S. subsidiary, Binance.US. The subsidiary, which has operated independently since its establishment in 2019, is a simplified platform set up by Binance to comply with US regulations. Many at the time believed that once Changpeng Zhao received a pardon and Binance resolved its legal issues, headquarters could reabsorb the US business. Following the Wall Street Journal report, Changpeng Zhao denied on social media platform X that he had discussed any transactions related to Binance.US with anyone, adding, "No convicted felon would object to a pardon." Gijo stated that World Free Finance was "completely unaware" of any negotiations regarding Binance.US. A government official also denied that Vitkov was involved in any discussions regarding the transactions. Meanwhile, Changpeng Zhao had been in contact with the Abu Dhabi royal family for years regarding an investment in Binance, but the deal had been stalled due to legal difficulties. To win the royal family's favor, he supported a local tech incubator and cultivated personal relationships through his network on the luxurious Saadiyat Island. In March of this year, Binance announced an agreement with MGX—an investment company run by the brother of UAE President Mohammed bin Zayed Al Nahyan. Under the agreement, MGX would acquire a minority stake in Binance for $2 billion, marking Binance's first introduction of an institutional investor. To commemorate this milestone, Sheikh Mohammed hosted Changpeng Zhao at his private palace in Abu Dhabi, a secluded palace typically used for receiving foreign dignitaries. Zhao posted a message in Arabic with a photo of the two of them, writing, "The will of God has been fulfilled"—indicating his acquisition of UAE citizenship. However, before the deal was finalized, Binance made a request: that MGX pay for the $2 billion share purchase using its soon-to-be-issued global free financial stablecoin, USD1. According to sources, the UAE agreed. According to a World Freedom Financial executive who spoke to business friends at the time, the Abu Dhabi royal family was "very interested in helping Trump advance his cryptocurrency ambitions." Gijo stated that the executive "doesn't recall saying that." To complete the transaction, MGX purchased USD1 tokens from World Freedom Financial, equivalent to bringing $2 billion in cash reserves to the Trump family business. World Freedom Financial will use these funds as reserves to maintain the USD1's 1:1 peg to the US dollar unless the tokens are converted into cash. The company will invest the reserves in US Treasury bonds and profit from the interest. If held for one year, this money could generate approximately $80 million in returns for World Freedom Financial. The rapid growth in MGX trading volume propelled USD1 into the ranks of the world's largest stablecoins. Gijo stated that USD1 has "a large number of other huge transactions in negotiation, it's just a matter of time." According to sources, some participants in the trading were initially confused as to why MGX chose USD1 and tried to understand the reasons. An MGX spokesperson stated that Binance required cryptocurrency settlement, and MGX chose USD1 after evaluating factors including "business suitability." In late April, Changpeng Zhao hosted a private summit for Binance's high-end clients at the St. Regis Resort Saadiyat Island's beachfront restaurant, meeting with Zak Vitkov and Pakistani entrepreneur Sakib. Participants also included an UAE executive responsible for MGX investments (who also serves as an advisor to World Freedom Finance), and a lobbyist representing both Binance and World Freedom Finance. The following night, a drone show spelled out "MGX" on the sea, and World Freedom Finance officially issued USD1 for the transaction. MGX completed its investment in Binance two days later. MGX transferred $2 billion worth of USD1 to Binance's account. According to blockchain data and sources, Binance has since kept most of its tokens on its platform. Gijo stated that Changpeng Zhao and Zak Vitkov are friends, and the World Freedom Finance team attended the summit to meet with MGX and discuss their interest in USD1. In June of this year, World Free Finance announced a partnership with the cryptocurrency exchange PancakeSwap to "drive USD1 adoption." This platform, managed by Binance, offers rewards and prizes to traders using Binance's blockchain ecosystem tokens. According to a previous report by the Wall Street Journal, this partnership caused a surge in USD1 trading volume. Gijo stated that Binance did not use PancakeSwap to inflate the USD1 price and indicated that World Free Finance collaborates with multiple institutions. A few days after the Binance Summit, at the "Binance Club" event in Dubai, Changpeng Zhao told attendees that he had been a "victim of the previous government's cryptocurrency war," but "now the situation has reversed, and we will be able to move forward much faster." In a podcast released in early May, Zhao revealed that his lawyers had formally submitted a pardon application two weeks prior. He said he decided to "just formally apply" after seeing reports in media outlets such as the Wall Street Journal that he was "seeking a pardon." According to sources, Zhao Changpeng's allies had begun privately expressing dissatisfaction, feeling that the pardon was delayed, especially after Trump had pardoned several cryptocurrency giants (including Silk Road founder Ross Ulbricht). They lamented that things were not going as smoothly as expected and began seeking advice. During the spring, Zhao Changpeng embarked on a global tour, encouraging world leaders to develop more favorable crypto regulatory policies. In Pakistan, Zhao Changpeng met with the Deputy Prime Minister alongside Sakib and joined the National Crypto Council, chaired by Sakib. “You are not just one person, you are a movement,” Sakib told him during talks at a Mughal-style fort in Lahore. Subsequently, Sakib arranged for Zak Vitkov to visit Pakistan and sign a cooperation agreement between the Pakistani government and the World Free Finance. According to sources, Binance is also expected to receive one of the first exchange licenses issued by the country's newly established crypto regulator. In May of this year, the Pakistani government appointed Sakib as Special Assistant for Crypto to oversee the agency. Gijo stated that Sakib is assisting the World Free Finance in “developing a framework for exporting stablecoins to other countries.” She claimed that Sakib and Changpeng Zhao knew each other outside of the World Free Finance, and that the World Free Finance “has never helped Changpeng Zhao in any way.” Sakib did not respond to requests for comment. In the United States, Changpeng Zhao's situation also continues to improve—he has completed several deals, leveraging funds from US investors to drive up the value of Binance's token, BNB. The so-called "crypto-treasury strategy" has become a trend on Wall Street, where publicly traded companies issue stocks and bonds to purchase specific crypto assets. According to former government officials, under the previous administration, such transactions would have been subject to strict scrutiny due to the Treasury Department and other departments' bans on Binance. The total value of BNB tokens in circulation has risen 75% since July, reaching $154 billion. According to former Binance executives and filings, Changpeng Zhao holds at least half of that. Meanwhile, Binance has intensified its lobbying efforts in the United States. According to federal records, Binance hired four U.S. lobbying firms this year, spending approximately $800,000 in the first nine months, compared to no lobbying expenditures last year. Of this, $450,000 was paid to a firm led by Ches McDowell, a lobbyist with close ties to the Trump family, primarily to push for amnesty and crypto policies. Binance also paid $260,000 to another firm, BakerHostetler, to lobby for crypto policies and “administrative clemency.” One of its lobbyists, Teresa Goody Guillén, also wrote to Congress this year on behalf of the World Free Finance—she attended Binance's exclusive summit for high-end clients in April. According to a source familiar with the matter, Binance representatives argued in their lobbying that, according to the current administration's standards, Changpeng Zhao's actions "do not constitute a prosecutable crime." The source indicated that the White House agrees with this view. However, opposition to a pardon remains within both parties. According to sources, some Trump advisors realized that pardoning Trump family business associates could trigger a congressional investigation should the Democrats regain control of the House in next year's midterm elections. New York Representative Jerry Nadler posted on social media platform X last week: "Trump is selling the power of pardons to anyone who can benefit him. This is a shameful abuse of power and a mockery of justice." Joe Lonsdale, a Trump supporter and co-founder of Palantir, also posted on X last week: "The president has received extremely poor advice on this—it makes it look like a massive fraud is taking place around him." Laura Loomer, a close ally of Trump, publicly opposed the pardon earlier this month, citing Changpeng Zhao's "birth in China and current citizenship of the United Arab Emirates." She wrote on X: “Do you know who can obtain UAE citizenship without being born in the UAE? Those who try to evade punishment.” Zhao Changpeng responded that he no longer holds Chinese citizenship and added, “Please don’t project your stereotypes onto others.” In another post, he wrote that a pardon would be “good news.” His wish finally came true in October. White House Press Secretary Carolyn Levitt confirmed the pardon on October 23, stating, “The Biden administration’s crypto war is over.” Weeks before the pardon announcement, Zhao Changpeng had quietly changed his bio on the X platform from “former Binance CEO” to simply “Binance.”
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