Binance's Pardon Push: A Sophisticated Influence Operation to Clear the Way for Trump's Family Business

Strategic Insights -

As Changpeng Zhao, the founder of Binance, a giant cryptocurrency exchange, awaits a potential pardon for money-laundering violations, a sophisticated influence operation is underway, backed by a team of high-priced lobbyists and lawyers with ties to the Trump administration. The operation aims to secure clemency for Mr. Zhao and Binance, paving the way for the company's re-entry into the U.S. market and threatening the business of other exchanges. Binance's efforts include hiring lobbyists with connections to the Trump family and cultivating a business relationship with World Liberty Financial, the Trump family's crypto business.

Key Takeaways:

  • Binance and its founder, Changpeng Zhao, pleaded guilty to money-laundering violations in 2023, acknowledging that a flawed compliance system had allowed bad actors to move money on the platform.
  • The company agreed to pay $4.3 billion in fines and to adopt provisions to ensure it was complying with U.S. sanctions and exiting the American market.
  • Mr. Zhao and Binance have hired lobbyists with ties to the Trump administration, including Teresa Goody Guillén, a former S.E.C. lawyer, to press for "executive relief" and to lobby Congress, the S.E.C., and the Commodity Futures Trading Commission.
  • Binance has also cultivated a business relationship with World Liberty Financial, the Trump family's crypto business, and its co-founder Zach Witkoff, the son of Steve Witkoff, Mr. Trump's longtime friend and peace envoy.
  • A pardon for Mr. Zhao would be a prime example of the abuse of the presidential clemency power, allowing a convicted felon to re-enter the market and potentially benefiting the Trump family's business interests.
  • The stakes for the crypto industry are high, as Binance's entry into the U.S. market would threaten the business of other exchanges, including Coinbase, the largest U.S. exchange and a major Binance competitor.

Statistics:

  • $4.3 billion: The amount that Binance agreed to pay in fines for violating U.S. sanctions.
  • $220,000: The minimum amount that BakerHostetler, the international law firm representing Binance and Mr. Zhao, has been paid by the company to lobby the White House for "executive relief" and to lobby Congress and other agencies.
  • $30,000: The minimum amount that Binance has paid to Perspective Strategies, a lobbying firm with ties to the Trump family, to shape crypto regulations.
  • 70 billion: The estimated worth of Changpeng Zhao, the founder of Binance.

Sources:

  • Vogel, K. P., & Yaffe-Bellany, D. (2023, May). Binance's Pardon Push: A Sophisticated Influence Operation to Clear the Way for Trump's Family Business. The New York Times.
  • BakerHostetler. (2023, February). Lobbying filings.
  • Perspective Strategies. (2023, May). Lobbying filings.
  • Binance. (2023, November). Press release announcing guilty plea.