Senator Elizabeth Warren’s legal team has strongly refuted Binance founder Changpeng “CZ” Zhao’s threat of a defamation lawsuit, asserting that his claims are “without merit” and accusing him of attempting to silence a public official. This dispute arises from Warren’s critical remarks regarding Zhao’s presidential pardon and underscores the growing tension between Washington lawmakers and the cryptocurrency industry.
The Statement That Ignited the Legal Clash
The confrontation commenced on October 23, when Senator Warren posted on X (formerly Twitter), stating that “CZ pleaded guilty to a criminal money-laundering charge and was sentenced to prison.” This statement was made shortly after President Donald Trump issued a pardon to Zhao, who had served a brief prison term for violating U.S. anti–money laundering laws under the Bank Secrecy Act.
In November 2023, Zhao had entered a guilty plea in federal court to “willfully failing to maintain an effective anti–money laundering program” at Binance, which is the world’s largest cryptocurrency exchange. This plea agreement resulted in substantial penalties, including over $4 billion in corporate fines, a $50 million personal penalty, and Zhao’s resignation from his position as CEO.
While the offense pertained to compliance failures rather than direct money laundering, the U.S. Department of Justice characterized it as a “criminal violation” that carried prison penalties, which are the terms Senator Warren used in her public statement.
CZ's Lawyers Demand a Retraction
Five days after Warren’s post, Zhao’s attorney, Teresa Goody Guillén of BakerHostetler, sent a letter accusing Senator Warren of defamation. Guillén argued that the senator’s statement “falsely implied” that Zhao was personally involved in money laundering, insisting instead that he had only accepted responsibility for “compliance failures” and not direct criminal laundering activities.
The letter formally requested that Senator Warren retract her statement, warning that her remarks had “caused serious harm” to Zhao’s reputation. Individuals close to Binance indicated that Zhao felt compelled to issue a public response to safeguard his public image amidst escalating political scrutiny of the cryptocurrency sector.
Warren’s Legal Team Affirms Accuracy of Statements
In a comprehensive six-page response dated November 2, Senator Warren’s attorney, Ben Stafford, firmly dismissed the defamation threat. Stafford stated, “Senator Warren’s post is true in all respects and therefore cannot be defamatory.” He elaborated that she had “accurately represented publicly available and widely reported facts,” and that the “charge referenced in Senator Warren’s post refers to the same charge Mr. Zhao pled guilty to and for which President Trump granted a pardon.”
Stafford referenced Zhao’s plea agreement in the case United States v. Changpeng Zhao, which explicitly classifies the violation as criminal under Title 31, Section 5322 of the U.S. Code, a statute titled “Criminal Penalties.” He further highlighted that the Justice Department itself had described Zhao’s actions as a willful violation of anti–money laundering law. Stafford concluded, “Simply put, any threatened defamation claim would be without merit.”
Protected Political Speech
Warren’s legal counsel also emphasized that her statement constituted protected political speech. As a sitting U.S. senator involved in overseeing financial regulation, her comments were considered part of her official legislative duties.
Even in the absence of official immunity, Stafford noted, Zhao would be required to prove “actual malice,” meaning that Warren knowingly made a false statement – a legal standard that courts rarely find to be met. He reiterated, “Here, her statement was completely accurate.”
The letter concluded by accusing Zhao of attempting to intimidate critics. Stafford wrote, “Your client’s actions reveal a pattern of attempting to suppress accountability rather than accept responsibility.” The letter affirmed that Senator Warren would not be intimidated or silenced by powerful entities within the cryptocurrency industry.
Trump’s Pardon and the Political Repercussions
President Trump’s decision to pardon Zhao in late October generated significant political controversy. Trump defended his action in a 60 Minutes interview, asserting that he did not know Zhao personally but had been informed that the case was part of a “Biden witch hunt.”
He also disclosed that his sons were involved in crypto ventures, stating, “I think it’s good. They’re running a business, not in government.”
These comments intensified concerns about potential conflicts of interest, particularly given that Binance had recently invested $2 billion into World Liberty Financial (WLFI), a crypto company linked to the Trump family business.
Democrats, with Senator Warren taking a leading role, accused Trump of “selling pardons to the highest bidder” and introduced a Senate resolution to condemn the decision. The resolution specifically noted that Zhao “pleaded guilty to willfully failing to maintain an effective anti–money laundering program while CEO of Binance.”
Broader Implications for Cryptocurrency and Politics
Legal experts observe that Zhao’s prospects of winning a defamation lawsuit against a U.S. senator are exceedingly low, due to the high legal threshold for defamation claims against public figures, which is even more stringent when the statements are made by a lawmaker in their official capacity.
For Senator Warren, this incident reinforces her public image as one of Capitol Hill’s most vocal critics of the cryptocurrency sector, which she contends has facilitated the flow of funds to terrorists, cybercriminals, and child abusers.
For Zhao, the situation complicates his efforts to rebrand himself as a reform-minded industry leader advocating for “balanced regulation” following his pardon.
The dispute also highlights a fundamental disagreement regarding the government’s role in overseeing digital finance. Senator Warren and her allies view Zhao’s case as evidence that voluntary self-regulation within the crypto industry is ineffective. Conversely, former President Trump and his supporters perceive it as an example of political bias and overreach by federal prosecutors.
A Symbolic Battle
In many respects, the confrontation between Senator Warren and Changpeng Zhao has come to symbolize a larger conflict between the principles of financial accountability and the pursuit of technological freedom. It represents a clash between a populist lawmaker dedicated to combating corporate influence and a billionaire entrepreneur seeking to rebuild his reputation after a criminal case.
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