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The former CEO of Binance, Changpeng Zhao or CZ, agreed to assist prosecutors in building their case against Justin Sun, the founder of Tron, The Wall Street Journal reported on April 12. The exclusive report that cited anonymous sources familiar with the matter stated:
“As part of Zhao’s plea deal, he agreed to give evidence on Sun to prosecutors.”
This “arrangement” or clause of his plea deal “hasn’t previously been reported,” the report said.
CZ discredits WSJ report as “hit piece”
Prior to the WSJ report’s publication, CZ posted on X that he had learned that the WSJ was writing “another baseless hit piece.” He noted that he had received the information from “multiple” sources.
After the report’s publication, CZ further discredited it on X, stating:
“WSJ is really TRYING here. They seem to have forgotten who went to prison and who didn’t.”
CZ pleaded guilty to violating anti-money laundering laws by failing to institute proper measures to bar criminals from using the largest crypto exchange. He also resigned from his position as CEO and agreed to pay a $50 million fine. Zhao was also barred from involvement in Binance for three years.
After serving a four-month sentence, CZ was released on Sept. 27, 2024. He claims that his prison sentence is proof that he did not agree to inform on Sun since “People who become gov witnesses don’t go to prison. They are protected.”
The above claim by CZ is not entirely accurate. It is true that providing testimony or evidence against another individual can lead to benefits in a plea deal, like a reduction in sentence or immunity. However, individuals can still be prosecuted if prosecutors obtain evidence of their crimes independently.
Nevertheless, CZ noted:
“I heard someone paid WSJ employees to smear me.”
CZ has denied previous WSJ claims
Last month, the WSJ published a report claiming that CZ was trying to obtain a pardon from U.S. President Donald J. Trump for his guilty plea.
The report further alleged that representatives of Trump’s family were in talks to invest in the U.S. arm of Binance, which paid a historic fine of $4.3 billion after pleading guilty. The Trump family is reportedly interested in acquiring a stake in the exchange’s U.S. entity.
In a post on X, CZ claimed that the WSJ report had gotten the “facts wrong.” He admitted that while no convicted felon would “mind a pardon,” he has had no such discussions. CZ added:
“Feels like the article is motivated as an attack on the President and crypto, and the residual forces of the “war on crypto” from the last administration are still at work.”
Reiterating his sentiment on April 12, CZ responded to a user stating that he “also heard some rumors about some players “lobbying” against us again in the US.”
Despite CZ’s previous denials, WSJ doubled down on its previous claims about Binance negotiating with Trump family about a possible deal. The report also alleged that the exchange is trying to loosen the reigns of the monitor that oversees its compliance with U.S. laws. Binance had agreed to the monitoring as part of its plea deal.
Sun calls CZ a “mentor and close friend”
In an X post, Sun said that he was “not aware” of the plea deal arrangement alleged by “circulating rumors.” He noted:
“CZ is both my mentor and a close friend—he has played a crucial role in supporting me during my entrepreneurial journey.”
He added that CZ’s “conduct and principles remain the highest standard I strive to follow as a founder.”
On March 22, 2023, the U.S. Securities and Exchange Commission (SEC) charged Sun and his companies for violating securities laws and engaging in fraud. The SEC alleged that the sale of TRON (TRX) and BitTorrent (BTT) tokens constituted unregistered securities offerings.
The SEC further claimed that Sun engaged in illegal wash trading to inflate the price of TRX. Wash trading refers to an illegal practice where a trader buys and sells a security almost simultaneously to manipulate the market. The fake trades indicate a higher trading volume and could attract legitimate investment in the security.
The SEC’s allegations also included that Sun and his companies orchestrated a scheme where high-profile celebrities were paid to endorse TRX and BTT without disclosing their compensation. Eight celebrities, including Lindsay Lohan, were separately charged by the SEC for participating in the endorsement scheme.
While Sun was fighting to have the SEC’s case dismissed, on Feb. 26, Sun and the SEC jointly filed a request to pause the legal battle to allow for settlement negotiations. Sun’s legal team said that the negotiations could open a path to resolution without further litigation.
Referring to the WSJ report in a separate X post, Sun said, “They always try to use rumors to drive us apart, to divide us instead of unite us.” He added that “standing together” was the only way to “change everything.”
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