The Binance Pardon: A Calculated Bet, Not Just "Corruption"
The pardon of Changpeng Zhao ("CZ"), founder of Binance, has predictably ignited a firestorm. Former DOJ attorney Elizabeth Oyer calls it "corruption," citing financial ties between Binance and Trump-linked ventures. But focusing solely on "corruption" misses a crucial point: this pardon isn't just about personal enrichment; it's a calculated bet on the future of crypto regulation – and who controls it.
The Numbers Behind the Noise
Let's dissect the situation. Zhao pleaded guilty to failing to prevent money laundering at Binance, resulting in a $4 billion fine. Post-plea, and before the pardon, the ICIJ reports Binance facilitated at least $408 million in USDT transactions for the organized crime-linked Huione Group. That's a hefty sum (roughly 10% of the total fine) generated after Zhao supposedly cleaned up his act.
Here's the rub: Zhao has publicly stated that if Binance gets a "refund" on that fine (a big "if," admittedly), he'd reinvest it in the US. Now, consider this alongside Trump's increasingly vocal pro-crypto stance. He even joked that his sons are "into it" and that crypto is "probably a great industry." It paints a picture, doesn't it?
The core argument isn't simply that Trump profited directly from the pardon (though the World Liberty Financial connection is undeniably murky). It's that the pardon signals a willingness to play ball with the crypto industry, potentially in exchange for future economic benefits – and perhaps more importantly, political capital.
Regulatory Capture: The Real Endgame
The Binance situation isn't an isolated incident. The ICIJ report also implicates OKX, HTX, Bybit, and Kraken in facilitating transactions linked to criminal organizations. This suggests a systemic problem within the crypto exchange landscape – a problem that cries out for regulation. Binance, OKX, HTX, Bybit, Kraken cited in ICIJ scam probe
But what kind of regulation? That's the million-dollar question. A Trump administration, potentially beholden to crypto interests, might favor lax regulations that allow the industry to flourish, even if it means turning a blind eye to illicit activities. This isn't just about lining pockets; it's about shaping the future of finance.
Consider the alternative: stringent regulations that stifle innovation and drive crypto businesses offshore. That's the risk the industry faces under a more skeptical administration. The pardon, therefore, can be viewed as an investment – a down payment on a future where Binance (and crypto in general) operates under favorable conditions.
And this is the part of the analysis that I find genuinely frustrating. We're arguing about whether $10,000 swung a $550 million deal (as some Senators are suggesting regarding World Liberty Financial's initial token offering), when the real money is in shaping trillions of dollars in future crypto flows.
Beyond Ethics: A Strategic Power Play
The ethical implications of the pardon are clear. As Harvard Law Professor Lawrence Lessig noted, the financial entanglements create "a private form of corruption going on inside of the executive branch." But focusing solely on the ethics obscures the strategic power play at work.
The "quid pro quo" argument – that Zhao literally paid for his pardon – is difficult to prove. The connections are circumstantial, even if they reek of impropriety. But the potential for future benefit – the possibility of shaping crypto regulation in a way that favors Binance and its allies – is far more significant than any immediate payoff.
Oyer's concerns about the erosion of DOJ independence are valid, but they don't fully capture the scope of the issue. This isn't just about a single pardon; it's about the potential for regulatory capture – the process by which an industry gains control over the agencies that are supposed to regulate it. The data, while incomplete, suggests this is a calculated move to influence the future landscape.