CZ Denies Quid Pro Quo Following Presidential Pardon; Clarifies World Liberty Financial Ties

DAVOS, Switzerland — Changpeng “CZ” Zhao, the billionaire founder and former CEO of Binance, is pushing back against allegations that his recent presidential pardon was the result of a financial alliance with the Trump family. Speaking at the World Economic Forum, Zhao characterized the narrative surrounding his connection to the First Family’s crypto venture as a fundamental misunderstanding of digital asset liquidity.

The Big Picture

The controversy centers on a $2 billion investment into Binance by an Abu Dhabi-backed firm, which utilized a stablecoin linked to the Trump family. Critics have suggested this transaction created a conflict of interest leading up to Zhao’s October 2025 pardon. Zhao maintains the deal was a standard commercial transaction with no political strings attached.

The Core Dispute

• The Transaction: In March 2025, the UAE state-owned firm MGX invested $2 billion into Binance.
• The Medium: The investment was settled in USD1, a stablecoin issued by World Liberty Financial (WLFI), a company founded by the Trump family.
• The Timing: The investment occurred six months before President Donald Trump issued a full pardon to Zhao, who had recently completed a four-month prison sentence.
• The Defense: Zhao asserts that the choice of currency was dictated by the investor, not by a strategic partnership with WLFI.

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"Misconstrued" Relationships

In an exclusive interview with CNBC’s Andrew Ross Sorkin on Thursday, Zhao was blunt regarding his ties to the administration. "There's no business relationships whatsoever," Zhao stated, addressing the speculation head-on.

Why the stablecoin choice mattered

Zhao explained that the use of USD1 was a matter of operational preference rather than an endorsement of the Trump-backed project.

• Avoidance of Legacy Banking: Zhao noted his long-standing desire to operate outside the traditional fiat banking system. "My request to [MGX] was they pay us in crypto. I don't want to deal with banks, really," he said.
• Currency vs. Equity: Zhao emphasized that accepting a stablecoin is not equivalent to taking an equity stake in the issuer. "Stablecoin is just a currency for payment. Just because I accepted that, it doesn't mean I invested in the issuer of that."
• Divestment Strategy: Since the initial $2 billion influx, Binance has systematically converted its USD1 holdings into other assets. Zhao confirmed the company has moved out of the stablecoin in portions over time to diversify its treasury.

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Context: The Road to Davos

To understand the gravity of Zhao’s current position, one must look at the legal odyssey that preceded his arrival in Switzerland this week.

1. The DOJ Settlement (November 2023)

Zhao and Binance reached a historic $4.3 billion settlement with the U.S. Department of Justice. As part of the plea deal:

• Zhao pleaded guilty to failing to maintain an effective anti-money laundering (AML) program.
• He was forced to resign as CEO and was barred from daily operations.
• Binance agreed to years of oversight by independent monitors.

2. Incarceration and Release (2024)

Zhao served a four-month sentence in a federal correctional facility, a period he has described as transformative. He was released in September 2024, remaining the majority shareholder of the world’s largest cryptocurrency exchange despite his lack of a formal executive role.

3. The October Pardon (2025)

President Trump’s decision to pardon Zhao just weeks after his release sparked immediate political firestorms. While the administration cited Zhao’s "contributions to American innovation" and the "disproportionate nature" of his sentencing, the MGX-USD1 connection became a focal point for Congressional oversight committees.

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World Liberty Financial Breaks Silence

The Trump-linked crypto venture, World Liberty Financial, has also moved to distance itself from the pardon controversy. The firm has faced scrutiny over whether its stablecoin's adoption by major players like MGX and Binance was part of a broader "pay-to-play" scheme.

In a statement provided to CNBC, WLFI spokesperson David Wachsman rejected the allegations:

"As we have stated many times, WLFI is not a political organization and had zero role in the pardon process. To imply otherwise is dangerous and false."

The MGX Factor

MGX, the Abu Dhabi-based sovereign investment vehicle, remains a silent but powerful third party in this narrative. By using USD1 for a multi-billion dollar transaction, MGX effectively provided the stablecoin with a level of institutional legitimacy that it had previously lacked. However, sources close to the firm suggest the move was driven by the UAE’s strategic pivot toward the "Trump-adjacent" digital economy rather than a direct request from Zhao.

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The Regulatory Outlook

Despite the pardon, Zhao and Binance are not entirely in the clear. The "Smart Brevity" take on their current regulatory standing:

• The Monitor is Watching: Binance remains under the watchful eye of a court-appointed monitor until 2026. Any perceived "political" transactions could trigger red flags.
• Shareholder Influence: While Zhao is not CEO, his status as a majority shareholder gives him significant "soft power." Regulators are closely watching to see if he attempts to exert control over the new CEO, Richard Teng.
• Global Compliance: Binance is currently seeking licenses in several European and Asian jurisdictions that may view the U.S. pardon with skepticism, potentially complicating their global expansion.

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What’s Next

The clarification provided by Zhao in Davos is an attempt to de-risk the Binance brand as it enters a new era of institutional adoption. By framing the USD1 transaction as a "payment preference" rather than a "political alliance," Zhao is signaling to the market that Binance intends to remain a neutral infrastructure provider.

Key developments to watch:

1. Congressional Inquiry: Democrats on the House Financial Services Committee are expected to call for a hearing regarding the MGX investment and the subsequent pardon.
2. USD1 Liquidity: Markets will watch to see if other major exchanges follow Binance's lead in accepting or offloading the Trump-linked stablecoin.
3. CZ’s New Ventures: Zhao has hinted at focusing on education and biotechnology (Giggle Academy), though his influence on the crypto market remains unparalleled.

The bottom line: Zhao is attempting to close the chapter on his legal troubles by portraying himself as a victim of "misconstrued" financial logistics. Whether the public—and federal regulators—accept this technical explanation of the $2 billion stablecoin transfer will determine the stability of Binance's future in the U.S. market.