CZ vs. Senator Warren: Binance Founder Considers Lawsuit Over Money Laundering Accusation

CZ vs. Senator Warren: Binance Founder Considers Lawsuit Over Money Laundering Accusation

Binance founder Changpeng “CZ” Zhao is contemplating legal action against U.S. Senator Elizabeth Warren for defamation following her accusations of money laundering. This situation escalates following Zhao's recent presidential pardon, which pertains to prior legal issues involving Binance.

Key Takeaways

Changpeng “CZ” Zhao, the Binance founder, threatens to sue Senator Elizabeth Warren for defamation over money laundering allegations.
Warren's claims followed Zhao’s pardon by President Trump, which resolved his previous legal issues with the U.S. Department of Justice.
Zhao was convicted of compliance violations under the Bank Secrecy Act, but not money laundering.
Legal experts note that while senators have protection for legislative comments, this does not cover social media statements.
Zhao has successfully pursued defamation claims in the past, highlighting his determination to defend his reputation.

The Dispute Unfolds

Changpeng “CZ” Zhao, the founder of Binance, has indicated plans to take legal action against U.S. Senator Elizabeth Warren for defamation. This comes after Warren accused him of money laundering in a social media post, a claim that Zhao's legal team asserts is false and damaging.

The conflict erupted following the pardon granted to Zhao by President Trump, which erased any remaining consequences from his plea deal with the U.S. Department of Justice. The crypto millionaire had already served a four-month prison sentence and paid a fine of $50 million after admitting to violating the Bank Secrecy Act—not for money laundering but for inadequate anti-money laundering (AML) measures while in charge of Binance.

Senator Warren Under Fire for Misleading Claims

In her statement, Senator Warren claimed, “CZ pleaded guilty to a criminal money laundering charge and was sentenced to prison. But then he financed President Trump’s stablecoin and lobbied for a pardon. Today, he got it. If Congress does not stop this kind of corruption, it owns it.”

This assertion quickly attracted backlash from legal analysts and fact-checking organizations. Social media platform X added a note clarifying that Zhao had not pleaded guilty to money laundering but rather to compliance failures under the Bank Secrecy Act. This violation did not involve any allegations of fraud or laundering of funds.

Zhao's attorney, Teresa Goody Guillen, stated that they are preparing to formally request a retraction from Warren. “Mr. Zhao will not stay quiet while a U.S. senator misuses their office to publicly make defamatory claims that harm his reputation,” she commented in a letter reviewed by media sources. If Warren does not retract her statements, Zhao plans to explore all legal options.

The Legal Implications: Can a Senator Be Sued for a Tweet?

Central to the dispute is Warren's unfounded claim regarding Zhao’s conviction for money laundering, which is absent from his case file. The Department of Justice had charged Zhao with failing to enforce sufficient AML controls, which allowed illicit transactions on Binance. This included transactions linked to sanctioned entities and criminal groups. Ultimately, Binance faced a substantial $4.3 billion fine—one of the largest penalties ever imposed on a corporation in the U.S., which led to Zhao stepping down as CEO.

Warren’s office has neither corrected nor amended her previous claims. When inquired about the impending lawsuit, a representative for the senator offered no immediate remarks. In a prior Fox Business interview, Warren reiterated that Zhao “plead guilty to violating the law" and that she was “calling him out for what he’s plead guilty to.”

Together with California Democrat Adam Schiff, Warren has introduced a resolution prompting Congress to investigate what they describe as “political corruption” related to Trump’s connections in the cryptocurrency space. Several Democrats have reached out to Attorney General Pamela Bondi, questioning whether Trump's business interests influenced the pardon granted to Zhao.

Rising Tensions Over Crypto-Related Pardons

Zhao, who has an estimated net worth of $61 billion and remains Binance's primary shareholder, refutes claims regarding his financing of Trump’s stablecoin, USD1, which is issued by the Trump family’s firm, World Liberty Financial. Zhao has dismissed rumors suggesting that Binance technology was involved in the token's development, labeling them as “misinformation.”

The consideration of defamation legal action represents a significant step taken by Zhao to protect his reputation. Experts indicate that while congressional representatives enjoy some constitutional protections for remarks made in an official capacity, this immunity does not extend to statements made on social media.

Guillen clarified this point on X, asserting that the Speech or Debate Clause does not cover sharing allegedly defamatory information in press releases and public communications. If Zhao moves forward with the lawsuit, it will not be his first involvement in defamation claims. In 2022, he sued the Hong Kong publisher Modern Media over a Chinese article branding Binance a “Ponzi scheme.” That case resulted in a settlement in 2024 after the publisher retracted the article's headline and issued an apology.

The new threat against Senator Warren emerges amid escalating discussions on Trump’s use of presidential pardons for individuals linked to the cryptocurrency industry. Warren and other Democrats argue that Trump has wielded executive clemency to shield associates with connections to his financial interests, a claim that Trump’s team refutes, stating that the pardon served as a correction of overreach by the Biden administration’s Justice Department.

The pardon granted to Zhao has reignited concern in Congress regarding cryptocurrency regulation. Representative Ro Khanna has proposed a bill banning elected officials from owning or creating cryptocurrencies, citing Zhao's pardon as evidence of “blatant corruption.” Additionally, Representative Maxine Waters criticized the pardon, describing it as “legitimizing crypto crime” and claiming it undermines federal law enforcement's efforts.