Is Trump’s pardon of Binance boss Changpeng Zhao a conflict of interest? |

US President Donald Trump has pardoned Binance founder Changpeng Zhao, creator of the world’s largest cryptocurrency exchange, who went to prison last year for failing to prevent criminals from using his platform to launder money connected to child sex abuse, “terrorism” and drug trafficking.

In a statement, White House press secretary Karoline Leavitt said on Thursday that Trump had “exercised his constitutional authority by issuing a pardon for Mr Zhao, who was prosecuted by the Biden Administration in their war on cryptocurrency”.

Zhao and Binance have been closely linked to the Trump family’s crypto companies. As such, the president’s decision to pardon Zhao is viewed by some as a conflict of interest. US economist and former Labor Secretary Robert Reich called Trump’s move part of a “Pay-to-Pardon Scheme”.

In response to the announcement, Zhao said on Thursday: “Deeply grateful for today’s pardon and to President Trump for upholding America’s commitment to fairness, innovation, and justice.” A token associated with Binance – BNB – rallied by 8 percent following Trump’s decision.

What was Zhao found guilty of?

Zhao was released from prison in September 2024, after serving a four-month sentence for violating the US Bank Secrecy Act. He was the first person to ever serve prison time for breaking that law, which was passed in 1970.

The act requires that financial institutions know their customers, monitor their transactions and file reports of suspicious customer activity. Prosecutors said no one had ever violated the rules to the extent that Zhao did between 2017 and 2024.

In his ruling, the judge for the Western District of Washington said he had been disturbed by Zhao’s decision to ignore any US banking rules that appeared to check Binance’s growth. “Better to ask for forgiveness than permission,” was Zhao’s approach to US law, prosecutors claimed.

Over the course of seven years, prosecutors said Binance had facilitated more than 1.5 million virtual currency trades – totalling roughly $900m – which violated US laws and sanctions, including ones involving al-Qaeda and Iran.

In addition, investigators said drug traffickers and networks linked to child sexual exploitation used Binance to move and convert illicit funds anonymously. The exchange’s weak customer verification system and tolerance for high-risk transactions made it a hub for illegal operations, they alleged.

Zhao, 47, pleaded guilty in November 2023 to one count of not monitoring money-laundering at his company and was barred from operating in the US. The firm also agreed to pay $4.3bn to settle other allegations from the Department of Justice.

“I failed here,” Zhao told the court last year during…