CZ defamation threat followed Elizabeth Warren’s X post about Trump’s pardon of Changpeng Zhao.
Warren’s lawyer called the threat “without merit,” citing factual accuracy.
Zhao pled guilty to a Bank Secrecy Act violation, not direct money laundering.
Legal experts say Zhao faces a high bar to prove defamation due to his public figure status.
The controversy deepens tensions between U.S. regulators, lawmakers, and crypto leaders.
The New York Post reported that Teresa Goody Guillén, Zhao’s attorney, issued a legal warning to Senator Warren over “defamatory statements” made on October 23rd. The post accused Donald Trump of “corruption” in granting a pardon to Zhao and referred to the Binance founder’s criminal case.
Source: X (@SenWarren)
Warren’s attorney, Ben Stafford, responded in a letter obtained by Punchbowl News, asserting that “any threatened defamation claim would be without merit,” since Zhao “pled guilty to violating an anti-money laundering law.”
According to Stafford, Warren’s remarks accurately reflected publicly available information about Zhao’s legal case and were “true in all respects.”
In November 2023, Changpeng Zhao pleaded guilty to failing to maintain an effective Anti-Money Laundering (AML) program at Binance, a violation of the Bank Secrecy Act (BSA). A federal court in Seattle sentenced him to four months in prison in April 2024.
Although Zhao has repeatedly insisted online that “there were NO money laundering charges,” the plea agreement still revolved around his company’s AML compliance failures, which the U.S. government classified as criminal conduct.
In her X post, Warren stated that Zhao “pleaded guilty to a criminal money laundering charge and was sentenced to prison.” She also alleged that Zhao “financed President Trump’s stablecoin and lobbied for a pardon.”
This post drew immediate backlash from Zhao and his supporters, prompting the CZ defamation threat. Warren’s statement also received a community note on X, a user-generated correction referencing public records about Zhao’s guilty plea.
Reports from The Wall Street Journal and Bloomberg revealed that Binance was instrumental in developing World Liberty Financial’s stablecoin, USD1, linked to Trump’s family crypto venture.
Source: X (@worldlibertyfi)
The stablecoin later played a role in a $2 billion investment deal involving MGX, a state-owned Emirati firm, acquiring a stake in Binance in March 2024.
Politico further reported that Zhao’s eventual pardon was the result of a months-long lobbying campaign funded by Binance’s legal and PR teams to gain favor within Trump’s political network.
Stafford argued that any CZ defamation threat would fail under U.S. law, noting that as a public figure, Zhao would need to prove actual malice, meaning Warren knowingly published false information or acted with reckless disregard for the truth.
Stafford wrote:
“Her X post does not state, and should not be construed to state, that he pled guilty to any other money laundering charge. It simply references the fact that Mr. Zhao pled guilty to a violation of U.S. anti-money laundering law.”
Goody Guillén, however, maintained that Zhao “will not remain silent while a United States Senator seemingly misuses her office to repeatedly publish defamatory statements that impugn his reputation.”
The letter demanded Warren retract both her X post and a Senate resolution criticizing Trump’s pardon or face potential legal action.
The clash underscores growing tension between U.S. lawmakers and major crypto figures over regulatory enforcement and political influence.
Warren, a long-time critic of the cryptocurrency industry, has frequently accused exchanges like Binance of facilitating illicit financial activity and evading oversight.
The CZ defamation threat may further intensify the debate around how crypto leaders wield political power, especially as pardons and lobbying efforts draw public scrutiny in Washington.
She said Zhao “pleaded guilty to a criminal money laundering charge and was sentenced to prison,” and suggested that he financed Trump’s stablecoin and lobbied for a pardon.
Zhao pled guilty to violating the Bank Secrecy Act for failing to maintain effective AML controls, not to direct money laundering.
Her lawyer argues that her statements were factual and publicly documented, meaning they cannot be considered defamatory.
Unless Zhao’s team files a formal lawsuit, the matter may remain a war of words rather than a court case.
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