Binance CEO Denies Aiding Trump Ally’s Crypto Project

Binance CEO Richard Teng has refuted allegations that the cryptocurrency exchange provided preferential treatment to a Trump-backed stablecoin, USD1, before former CEO Changpeng Zhao (CZ) received a presidential pardon. These claims surfaced amid scrutiny surrounding a $2 billion investment Binance secured from Abu Dhabi’s state-owned investment firm, MGX.

The investment involved the use of USD1, a stablecoin affiliated with World Liberty Financial, a crypto venture linked to the Trump family. Concerns were raised that MGX’s investment, coupled with Binance’s subsequent listing of USD1, may have amplified the stablecoin’s visibility and perceived legitimacy, potentially influencing the pardon granted to CZ. The pardon, coming after Zhao’s guilty plea relating to US anti-money laundering laws, raised eyebrows given the unusual link to a Trump backed coin.

Speaking to CNBC on Monday, Teng firmly denied any preferential treatment towards USD1. “The decision to use USD1 for the transaction between MGX, as a strategic investor, and Binance was solely MGX’s decision. Binance did not participate in that decision,” Teng stated, aiming to distance the exchange from any deliberate attempt to boost the stablecoin’s profile.

He further emphasized that USD1 was already listed on other exchanges prior to Binance and reiterated Binance’s commitment to engaging with promising new projects within the crypto space. “As the world’s largest crypto ecosystem, we regularly evaluate and engage with emerging projects. Success is not always guaranteed, but in the case of USD1, I’m pleased that both parties found a mutually beneficial arrangement.”

Teng’s comments come on the heels of a Wall Street Journal report alleging that Binance not only facilitated the settlement of MGX’s investment using USD1 but also assisted in developing the underlying technology of the stablecoin. The report cited unnamed sources claiming direct knowledge of these activities, further fueling the debate surrounding Binance’s potential conflicts of interest.

The Wall Street Journal had previously highlighted that World Liberty Financial experienced significant gains from the listing of USD1 on Binance and its partnerships with entities purportedly associated with Binance, like PancakeSwap. This is coupled with the fact that the coin was used to pay for a multi-billion dollar stake demonstrates the importance a listing can have on the asset.

Political pressure is mounting on Capitol Hill, with opposition leaders, most notably Senator Elizabeth Warren, accusing Binance and the Trump administration of potential corruption related to the CZ pardon and Binance’s connections with World Liberty Financial. Warren, a vocal critic of the crypto industry, asserted that the pardon was, in essence, a reward for boosting a Trump-linked crypto venture after Zhao’s guilty plea to money laundering charges.

Warren stated last month that, “First, Changpeng Zhao pleaded guilty to a criminal money laundering charge. Then he boosted one of Donald Trump’s crypto ventures and lobbied for a pardon,” with the President later doing “his part.” Binance did not immediately respond to requests to clarify the nature of its technological assistance to World Liberty Financial, leaving a degree of uncertainty regarding the exchange’s direct involvement in USD1’s infrastructure, and the depth of any collaboration.

CZ officially stepped down as Binance chief executive in 2023, but remains the company’s major shareholder, according to Teng. This structure brings up potential concern in regards to the company’s leadership structure and potential outside influences.

Criticisms extend to World Liberty Financial’s close ties to the Trump administration, as it explores international partnerships and investment opportunities. According to its website, DT Marks DEFI LLC, a firm associated with the Trump family, receives a substantial portion of the platform’s revenue and holds significant amounts of digital tokens associated with the company. It is believed that the revenue has reached multi-million dollar numbers.

The purchase of $2 billion in USD1 tokens by MGX has also prompted scrutiny, particularly given the timing. A report a few months back noted that it occurred roughly two weeks prior to the White House formalizing an agreement with the U.A.E. regarding access to American microchips. This proximity in timing has triggered questions about potential connections between the crypto venture and geopolitical considerations, with no clear answers.

Donald Trump Jr., co-founder of World Liberty Financial and son of the former U.S. president, previously dismissed any conflicts of interest as overblown. At the time, he said that their fathers were not focused on or directly involved in the business.

Changpeng Zhao stepped down from his leadership role at Binance in 2023 after pleading guilty to charges of enabling money laundering through the cryptocurrency exchange. Although Zhao has paid a fine and relinquished his position, the shadow of the case continues to loom over Binance, particularly in light of the pardon granted during a time crypto regulation is still being discussed in the United States.

The White House has stated that Zhao was prosecuted for violating banking laws and not for any alleged fraud or identifiable victims. This distinction suggests a focus on compliance and regulatory violations rather than direct financial harm to individuals.

Trump has voiced support for the cryptocurrency sector since returning to office, proposing new crypto legislation, while also signaling a shift away from enforcement actions that targeted crypto exchanges during his time in office. Addressing speculation about his knowledge of Zhao, Trump admitted he knew very little about him, suggesting the pardon came at the request of others and not from any personal knowledge or relationship. Insiders familiar with the matter have noted that the push to pardon Zhao came from powerful elements within the republican party, who believed the prosecution was politically motivated.

He further suggested that the US will be the “Global crypto capital of the world”. This is expected to boost global confidence in the crypto market in the country.