Key Insights
- The WSJ recently reported that the former Binance CEO agreed to provide evidence against Justin Sun for a lighter sentence.
- The article even claimed that Binance execs were currently lobbying the US Treasury to relax its oversight on the company.
- CZ wasted no time and took to Twitter (now X) to deny the allegations soon after on 12 April.
- Sun took CZ’s side and took to X to push back against the WSJ report. He responded by calling CZ a “mentor and a close friend.”
- Neither Changpeng Zhao nor Justin Sun are strangers to controversy, but the industry continues watching closely
Former Binance CEO Changpeng “CZ” Zhao has just called the Wall Street Journal (WSJ) over what he calls a “baseless hit piece.”
For context, the WSJ recently reported that the former Binance CEO agreed to provide evidence against Justin Sun, the founder of the Tron network.
This alleged move from CZ was part of a supposed plea deal with the U.S. Department of Justice (DOJ).
However, Zhao has taken to the internet to claim that there is no truth to the WSJ’s allegations.
Here’s what really went down and what this story means for the crypto space.
The WSJ Report That Sparked Controversy
The report in question went live on 11 April. Within said report, the WSJ alleged that Zhao agreed to testify against Justin Sun in exchange for a lighter sentence in his plea deal with U.S. authorities.
According to unnamed sources familiar with the case, this arrangement had not been public knowledge until now.
The article even claimed that Binance execs were currently lobbying the US Treasury to relax its oversight on the company.
Furthermore, Binance as a company was planning to list a Trump-affiliated stablecoin called USD1.
These claims, being heavy accusations, sent shock waves across the crypto space, especially because they have close ties to ongoing regulatory/political issues within the crypto industry.
“People Who Testify Don’t Go to Prison”
CZ wasted no time and took to Twitter (now X) to deny the allegations soon after on 12 April.
“WSJ is really TRYING here,” he wrote. “They seem to have forgotten who went to prison and who didn’t. People who become government witnesses don’t go to prison. They are protected.”
He didn’t stop there, though. CZ fired back with “allegations” of his own, indicating that someone paid the WSJ to damage his reputation.
“I heard someone paid WSJ employees to smear me,” he said.
It is worth noting that CZ indeed went to prison for four months after pleading guilty to violations of the Bank Secrecy Act (BSA).
This prison sentence was specifically as punishment for Binance’s failure to implement a proper anti-money laundering (AML) program.
While CZ did not deny his conviction, he strongly denies the idea that he made any kind of deal implicating Sun.
Sun Also Denies the Allegations
Justin Sun, the billionaire founder of Tron in question, has always been a controversial figure in his own right.
However, Sun took CZ’s side and took to X to push back against the WSJ report.
He responded, praising CZ as a “mentor and a close friend.”
Sun claimed that he was not aware of the rumors before dismissing them as another attempt to “drive us apart”.
“They always try to use rumors to drive us apart,” Sun posted. “Only by standing together can we change everything.”
It is worth noting that Sun is currently facing separate legal issues from both the SEC and DOJ.
Despite these issues, the Tron founder has maintained a cooperative image and even publicized TRON’s partnership with Tether and TRM Labs recently against the illegal use of stablecoins.
Government Witnesses Do Go To Prison
While at first glance, CZ made a good point by stating that government witnesses do not go to prison, history has shown that this is not always the case.
Only recently, Caroline Ellison, the former CEO of Alameda Research, pleaded guilty and testified against Sam Bankman-Fried.
Ellison ended up with a two-year sentence, despite the cooperation.
This sentence is far less than the recommended 110 years she initially faced. However, it is still prison time.
This said, CZ initially faced a 3-year prison sentence as recommended by prosecutors but ended up with four months.
Some legal analysts were surprised by how lenient the final sentence was.
However, there is no public evidence that the shortened length of the sentence came from any kind of cooperation against Sun.
Binance’s Push to Ease Oversight
In addition to the above allegations, the WSJ report also claimed that Binance executives met with Treasury Department officials in March.
This meeting was geared towards lifting some of the compliance monitoring requirements placed on Binance.
Recall that as part of Binance’s infamous $4.3 billion settlement in 2023, two monitors were installed within the exchange, one from the DOJ and another from the Treasury’s FinCEN.
The report alleged that Binance is trying to remove the monitor from FinCEN specifically.
The alleged cooperation between Binance and Trump-affiliated crypto ventures also adds some more complexity to the story.
According to the WSJ, Sun invested $75 million into the Trump-affiliated USD1 stablecoin through World Liberty Financial.
The stablecoin’s marketing claims that USD1 is backed by short-term U.S. government treasuries, dollar deposits and other cash equivalents.
According to the WSJ, Binance could be looking towards listing USD1 as part of a possible second Trump presidency.
Still, CZ denies reports that the Trump family was attempting to buy into Binance’s U.S. affiliate.
“I have had no discussions of a Binance US deal with… well, anyone,” he wrote.
The Final Takeaway
Neither Changpeng Zhao nor Justin Sun are stranger to controversies.
Their empires have shaped much of the crypto space, and any allegations of betrayal are likely to become front-page news, whether true or false.
There is currently no concrete evidence to back the WSJ’s claims.
However, CZ and Sun are staying united against what they perceive to be a politically motivated attack.
The world today continues to see more interactions between US politics and crypto, with stories like these becoming more and more common.
While CZ is now out of prison and Binance is attempting to reform its services, the industry continues to watch closely.
