By Zeke Faux, Muyao Shen and Anthony Cormier, Bloomberg
One of the Trump family’s crypto ventures has received key behind-the-scenes help from the world’s largest digital-asset exchange, whose founder is a convicted felon now seeking a presidential pardon.
Binance wrote the basic code to power USD1, a stablecoin launched by the Trumps’ World Liberty Financial Inc., according to three people familiar with the matter. They asked not to be named because the arrangement was private. Later, Binance’s founder and principal owner, Changpeng Zhao, said publicly that he had applied for a pardon. CZ, as he’s known, pleaded guilty in 2023 to failing to maintain an effective anti-money-laundering program.
The coding work — writing the “smart contract” that governs how USD1 tokens are created — helped make USD1 available for use in a $2 billion transaction this spring when an investment firm founded by the United Arab Emirates used it to buy a stake in Binance. Now, more than two months since that transaction, more than $2 billion in USD1 — roughly 90% of all coins outstanding — remains in Binance’s wallets, according to blockchain data. The assets backing that sum generate interest income, which could reach tens of millions of dollars for the Trumps on an annual basis. Binance also promoted USD1 to its 275 million users, a sought-after benefit among stablecoin issuers.
In short, blockchain data, public announcements and accounts from people familiar with the situation show that Binance helped create the coin, helped promote it and took part in its largest known transaction. It’s unclear whether Binance or Zhao has received any payment from World Liberty in return.
A Binance spokesperson didn’t respond to questions about the coding help or investment deal but said USD1 followed the exchange’s “standard listing process.” She noted that Zhao is no longer Binance’s chief executive officer, said his decision to apply for a pardon “is a personal one” and referred questions about it to him. Zhao did not respond to messages seeking comment.
A White House spokesperson declined to comment for this story. A spokeswoman for World Liberty didn’t respond to specific questions about the company’s dealings with Binance, but said in an email, “your assertions are factually deficient and designed to further a political agenda.”
Looming over Binance’s interactions with World Liberty are both firms’ most famous principals: Zhao, who wants a pardon, and Trump, the only person in the world who can give him one. Critics say the situation creates a conflict of interest for the president.
“We have never had this since the Civil War: a president whose personal financial interests conflicted with his official duties,” said Richard Painter, a professor at the University of Minnesota Law School who served as the White House’s chief ethics counsel from 2005 to 2007. “We haven’t had anything even close to this significant.”
Previously, the White House has said Trump has no conflicts of interest because he has placed his assets in a trust controlled by his eldest son, Donald Trump Jr. The president has said he plays no role in business decisions or investments. An ethics agreement released before he took office in January says Trump will receive only “general business updates” about his main company, the Trump Organization, “and not an accounting of the performance of any specific business or asset.”
Trump Jr. celebrated the debut of USD1 in March with a post on X: “Built in America, backed by real dollars, and designed for everyone. Let’s revolutionize finance together.”
‘Crypto Capital’
Trump, who once called Bitcoin a “scam,” had a change of heart last year, saying he hoped to make the US the “crypto capital of the world.” Now, crypto ventures — including World Liberty and a memecoin Trump announced days before his inauguration — have added at least $620 million to his fortune in a span of months, according to the Bloomberg Billionaires Index. Meanwhile, his administration has stepped back from enforcement cases that financial regulators brought against crypto companies during former President Joe Biden’s administration.
Eric Trump, the president’s second-eldest son, has said he grew interested in cryptocurrency after banks began denying services to his family’s business. “The second you start saying something that goes against the system, they’ll cancel you, they’ll ostracize you, they’ll come after you, and it’s really amazing,” he said in May at a crypto conference in Dubai. “That’s actually what caused me to find cryptocurrency.”
Neither World Liberty nor Binance has described how the companies began talking. Two people with knowledge of the matter said Zhao met with Steve Witkoff, one of World Liberty’s co-founders, in December, not long after Trump’s election victory, at a Bitcoin conference in Abu Dhabi. By then, Zhao had been out of a federal halfway house in Long Beach, California, for less than three months, having served a short sentence after his guilty plea. His exchange paid more than $4 billion in penalties after authorities accused it of allowing money to “flow to terrorists, cybercriminals and child abusers through its platform.”
A person close to Witkoff disputed that the Abu Dhabi meeting occurred, saying Witkoff doesn’t remember it. Trump had tapped Witkoff, a real estate developer, to serve as a key diplomat in his administration. Witkoff has said he’d exit World Liberty by transferring his interest to his adult sons. “He is working with ethics officials and counsel,” said David Warrington, White House counsel, “including taking all the legal steps necessary to divest.”
The substance of any initial conversations is unclear. But in mid-March, Bloomberg News reported that Binance and World Liberty had begun talks about the possibility of developing a new stablecoin, and The Wall Street Journal reported that Zhao was pressing the Trump administration for a pardon.
On social media, Zhao and World Liberty denounced both stories. Within two weeks, however, World Liberty announced that it was creating a new stablecoin that would be traded on a Binance-founded blockchain. And in May, Zhao announced that he had applied for a pardon.
“If they’re writing this article,” he said on the Farokh Radio podcast, “I might as well just officially apply.”
As a stablecoin, USD1 is intended to be always worth $1 because each token is supposed to be backed by $1 worth of real assets like cash or Treasuries. Promoters say stablecoins will revolutionize international payments because they can be transferred cheaply and quickly. Critics say they’re vulnerable to runs and note that federal authorities previously have linked some stablecoins to illicit activity. No such activity has been linked to World Liberty, which holds $2.1 billion in government money market funds, according to a recent attestation of its reserves.
Stablecoins can be lucrative for their issuers, who earn interest on the assets that back them. Tether Holdings SA, issuer of the world’s most popular stablecoin, says it made $13 billion in profit last year.
When USD1 launched, World Liberty listed only one business partner: Palo Alto, California-based BitGo Inc., which said it would provide the “underlying infrastructure and user experience” for minting and burning the stablecoins. “Minting and burning” means creating new tokens when users buy them and destroying them when they’re cashed in. A BitGo spokesperson declined to comment.
Soon after World Liberty announced its new stablecoin, the BNB Smart Chain that was founded by Binance made the new token part of a broad promotion campaign that offers zero transaction fees on trades. Binance’s spokesperson said the campaign is designed “to promote stablecoins built on BNB Chain.”
“BNB Chain is open to all projects in principle, and particularly welcomes stablecoins,” she said.
A recent regulatory filing by Circle Internet Group Inc., another stablecoin issuer, suggests how valuable promotional help can be. It said Circle paid Binance $60 million upfront in part to promote its coin, USDC, and agreed to share future revenue with the exchange. Under the two-year deal, Binance also agreed to hold USDC in its company treasury.
World Liberty’s new stablecoin got off to a slow start, according to blockchain data, which isn’t surprising. There are many competitors, some of them well established, and all of them offer similar, if not identical, functionality.
But by May, Zhao was involved in the biggest known use of USD1 yet. That month, the investment firm that the UAE founded, MGX, used the stablecoin to purchase a $2 billion stake in Binance.
That surprised Circle executives, who were expecting that their stablecoin would be chosen, according to two people familiar with the matter. Using World Liberty’s coin meant that Binance lost out on the revenue sharing that’s part of its promotional deal with Circle, said the people, who asked not to be named because the matter is private.
Zhao posted on X later that determining which currency to use in transactions is “mostly at the choice of the payer.” MGX didn’t respond to a request for comment.
Binance wallets still hold more than $2 billion of USD1. At that amount, even a 4% yield would generate $80 million annually. Under the terms of the World Liberty’s prospectus, the Trump family would be entitled to about $30 million of it.
Meanwhile, Zhao’s relationship with US regulators has improved markedly. In May, the Securities and Exchange Commission dropped a lawsuit against Binance that had been filed in June 2023, one of several crypto-focused enforcement actions the regulator has either abandoned or paused.
The SEC had accused the exchange of, among other things, lying to regulators about its operations in the US. The lawsuit quoted Binance’s former chief compliance officer texting a colleague, “We are operating as a fking unlicensed securities exchange in the USA bro.” The SEC said it was dropping the case “in the exercise of its discretion and as a policy matter.”
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