Changpeng “CZ” Zhao, founder of crypto exchange Binance, has dismissed a Wall Street Journal report alleging he agreed to testify against Tron founder Justin Sun as part of a 2023 plea deal with U.S. authorities. The report, which also details Binance’s efforts to reduce federal oversight, has sparked debates about transparency and political ties in the crypto industry.
CZ Calls WSJ Allegations “Baseless”
In an April 12 post on X, CZ criticized the WSJ’s claims, calling them a “smear campaign” and asserting that government witnesses typically avoid prison—a nod to his four-month sentence for Anti-Money Laundering (AML) violations. “People who become gov witnesses don’t go to prison. They are protected,” he wrote 1 2.
The WSJ cited unnamed sources alleging CZ’s cooperation with prosecutors investigating Sun, who faces separate SEC and DOJ scrutiny. CZ, released from prison in September 2024 with a $60 billion net worth, denied any such arrangement 1 3.
Justin Sun Defends CZ, Praises DOJ Collaboration
Sun, founder of the Tron blockchain, dismissed the rumors, calling CZ his “mentor and close friend” and highlighting their shared commitment to compliance. “Whether it’s CZ or our partners at the DOJ, we maintain direct, honest communication,” Sun stated 4 5.
Sun also emphasized Tron’s collaboration with the DOJ through the T3 Financial Crime Unit, a partnership with Tether and TRM Labs aimed at combating illicit crypto activity 6.
Binance Seeks to Loosen U.S. Oversight
The WSJ report claims Binance executives recently met with Treasury officials to lobby for the removal of a federal monitor overseeing its AML compliance—a condition of its 2023 $4.3 billion settlement 7. The exchange is also in talks to list USD1, a stablecoin backed by Trump-linked venture World Liberty Financial 3 8.
Analysts speculate Binance’s moves align with efforts to curry favor with a potential second Trump administration, which could ease crypto regulations. Trump has previously pardoned figures like Silk Road’s Ross Ulbricht and BitMEX co-founder Arthur Hayes 7.
Political Calculus and Crypto’s Future
The allegations against CZ and Sun underscore the crypto industry’s tightrope walk between innovation and regulation. While Binance eyes a U.S. comeback, its regulatory strategy appears intertwined with political alliances. Crypto firms spent over $134 million on the 2024 elections, raising concerns about lobbying influence 1 8.
Despite CZ’s claim that government witnesses avoid jail, former Alameda CEO Caroline Ellison received a two-year sentence after testifying against FTX’s Sam Bankman-Fried 7.
What’s Next?
• For Binance: Success in reducing oversight could pave the way for its USD1 stablecoin launch and U.S. market re-entry.
• For Sun: The SEC’s ongoing fraud case remains paused for settlement talks, but DOJ scrutiny persists 6.
• For Crypto: The industry faces mounting pressure to balance growth with compliance, as governments worldwide tighten controls.
As CZ and Sun navigate legal and political headwinds, their cases highlight the high stakes—and complex alliances—shaping crypto’s future.
Key Takeaways:
• CZ denies WSJ’s claims of testifying against Sun, calling them unfounded.
• Binance seeks to ease U.S. oversight while aligning with Trump-linked projects.
• Regulatory battles and political lobbying remain central to crypto’s evolution.
