Trump's Crypto Play Gets a Boost from Binance, Founder Seeks Pardon

Recent revelations highlight a complex intersection of cryptocurrency, political influence, and potential conflicts of interest. A crypto venture linked to the Trump family, World Liberty Financial Inc., received crucial technical assistance from Binance, the world's largest crypto exchange, prior to its founder Changpeng Zhao (CZ) publicly seeking a presidential pardon.

Key Findings

• Binance's Coding Support: Binance reportedly wrote the core code for USD1, World Liberty's stablecoin. This included the 'smart contract' functionality that enables the creation of USD1 tokens.
• Large-Scale Transaction: USD1 was used in a $2 billion transaction this spring when an investment firm founded by the UAE used it to buy a stake in Binance.
• Binance's Wallets Hold Majority of USD1: Over 90% of all outstanding USD1 (over $2 billion) remains in Binance's wallets.
• Potential Conflict of Interest: The situation raises ethical questions, as CZ is seeking a pardon from Trump, whose family stands to benefit financially from USD1's success.
• Trump's Crypto U-Turn: Trump, once critical of Bitcoin, has embraced cryptocurrency, aiming to make the US a “crypto capital.”

The Backstory

Following his guilty plea in 2023 for failing to maintain an effective anti-money-laundering program, CZ's application for a pardon has put his relationship with the Trump family under scrutiny. The support Binance provided to World Liberty, including coding assistance and promotion of USD1, raises questions about potential quid pro quo.

While a Binance spokesperson stated that USD1 followed the exchange's “standard listing process” and that CZ's pardon application is a “personal one,” the timing and scale of the collaboration are notable.

Richard Painter, a former White House ethics counsel, emphasized the unprecedented nature of the situation, stating, “We have never had this since the Civil War: a president whose personal financial interests conflicted with his official duties.”

Key Takeaways

• The intersection of cryptocurrency and politics is becoming increasingly complex, raising new ethical challenges.
• Stablecoins can be lucrative for their issuers, generating significant interest income from the assets backing them.
• Regulatory scrutiny of cryptocurrency exchanges and stablecoins remains a critical issue.