The former head of Binance, Changpeng Zhao (commonly referred to as CZ), has consented to assist law enforcement in building their case against Justin Sun, the founder of Tron, as reported by The Wall Street Journal on April 12. The exclusive article cited unnamed sources acquainted with the situation, stating:
“As part of Zhao’s plea arrangement, he has agreed to testify against Sun for the prosecutors.”
This “arrangement” within his plea agreement was not previously disclosed, according to the article.
CZ dismisses WSJ report as a “hit piece”
Following the publication of the report, CZ further dismissed it on X, asserting:
“WSJ is really TRYING here. They seem to have forgotten who went to prison and who didn’t.”
CZ admitted guilt to breaching anti-money laundering regulations by failing to implement adequate measures to prevent illicit actors from utilizing the largest cryptocurrency exchange. He also resigned as CEO and was fined $50 million. He has been prohibited from participating in Binance for three years.
After completing a four-month sentence, CZ was released on September 27, 2024. He asserts that his prison sentence serves as evidence that he did not agree to testify against Sun since “Individuals who become government witnesses don’t serve time. They are kept safe.”
This assertion by CZ is somewhat misleading. While it is true that cooperating with prosecutors can result in plea deal benefits, such as sentence reductions or immunity, individuals may still face charges if evidence of their wrongdoing is obtained independently by the prosecutors.
Nonetheless, CZ remarked:
“I heard someone paid WSJ employees to tarnish my image.”
CZ has refuted earlier WSJ claims
In the previous month, the WSJ published a report alleging that CZ sought a pardon from U.S. President Donald J. Trump in relation to his guilty plea.
The article also claimed that representatives from Trump’s family were in discussions to invest in Binance’s U.S. division, which faced a record fine of $4.3 billion after an admission of guilt. The Trump family is reportedly keen on acquiring a stake in the U.S. branch of the exchange.
In a separate post on X, CZ argued that the WSJ had misrepresented the “facts.” He acknowledged that while no convicted individual would object to a pardon, he had not engaged in such discussions. CZ added:
“It feels like the article is driven by a desire to attack the President and the crypto space, with residual forces from the previous administration’s ‘war on crypto’ still at play.”
Reinforcing his previous comments on April 12, CZ responded to a user saying he had also heard rumors of various parties “lobbying” against them in the U.S.
Despite CZ’s prior denials, the WSJ reiterated its earlier assertions regarding Binance negotiating with members of the Trump family over a potential deal. The article further claimed that the exchange is attempting to ease the restrictions of the monitor overseeing its compliance with U.S. regulations, which was part of the plea agreement.
Sun describes CZ as a “mentor and close friend”
In a post on X, Sun stated he was “not aware” of the alleged plea deal arrangement circulating in “rumors.” He emphasized:
“CZ is both my mentor and a close friend—he has played a pivotal role in supporting me throughout my entrepreneurial journey.”
He concluded by stating that CZ’s “conduct and principles are the highest standard I strive to uphold as a founder.”
On March 22, 2023, the U.S. Securities and Exchange Commission (SEC) charged
Sun and his companies with violating securities laws and committing fraud. The SEC contended that the issuance of TRON (TRX) and BitTorrent (BTT) tokens constituted unregistered securities offerings.
The SEC additionally claimed that Sun engaged in illicit wash trading to inflate TRX’s value. Wash trading involves a trader buying and selling a security nearly simultaneously to manipulate market perceptions, creating an illusion of higher trading activity and attracting legitimate investment.
Additionally, the SEC alleged that Sun and his companies orchestrated a scheme where high-profile celebrities were compensated to promote TRX and BTT without disclosing their payment. Eight celebrities, including Lindsay Lohan, faced separate charges from the SEC for their involvement in the endorsement scheme.
While Sun was fighting to dismiss the SEC’s case, on February 26, he and the SEC submitted a joint request to pause the litigation to facilitate settlement discussions. Sun’s legal team indicated that this could pave the way for a resolution without further legal battles.
Addressing the WSJ report in a separate post on X, Sun remarked, “They repeatedly attempt to use rumors to create discord between us instead of promoting unity.” He added that “standing united” was essential to effecting change.