CZ's pardon controversy escalates: Lawyer strongly criticizes allegations of "monetary transactions", Democrats demand thorough investigation into Trump family's interest transfers.

In November 2025, CZ's pardon decision sparked a political storm across the United States, with his lawyer Teresa Goody Gillan sharply criticizing the media's allegations of “money for freedom” as based on a “fundamental misunderstanding of Blockchain technology.” Democratic lawmakers, including Elizabeth Warren and Bernie Sanders, jointly wrote to the Attorney General demanding an investigation into the financial connections between the Trump family and the exchange behind them, while Trump himself claimed in a television interview that he “does not know CZ.” This political and legal game, involving a $4.3 billion fine and a $2 billion investment from the UAE's MGX Fund, is reshaping the regulatory landscape for encryption in the United States.

Legal Disputes and Political Games Surrounding Trump's Decision to Grant Clemency to CZ

Lawyer Gilen for CZ strongly defended the pardon decision in an interview on the Pomp Podcast, pointing out that executives of traditional financial institutions have never faced criminal prosecution in similar anti-money laundering violation cases. She emphasized that the CZ case involved no fraud, no victims, and no prior criminal record. She characterized the previous Department of Justice indictment as “the Biden administration's war on cryptocurrency,” believing that the relevant exchange and CZ became targets for setting an example after the FTX collapse. This defense directly addresses the issue of selective enforcement by the U.S. judicial system against the cryptocurrency industry.

Legal experts have pointed out that the CZ case has indeed created multiple precedents: the first cryptocurrency exchange CEO to be jailed due to deficiencies in anti-money laundering procedures, the highest record of a personal payment of $50 million in fines, and the largest settlement case in the crypto industry with a company paying $4.3 billion. However, compared to traditional banking cases, where HSBC paid $1.9 billion in settlement in 2012 for money laundering allegations without any executives being prosecuted, this difference has become the core argument in Gilen's defense.

Key Timeline of the CZ Pardon Incident

November 2023: CZ pleads guilty to anti-money laundering charges

September 2024: CZ released after serving 4 months in prison.

October 2024: Trump grants presidential pardon

November 2025: Democratic lawmakers jointly call for an investigation

Settlement amount: a certain exchange pays $4.3 billion, and CZ personally pays $50 million.

MGX Investment: UAE fund invests $2 billion through World Liberty Financial's $1 investment.

Political Reaction: Several Democratic lawmakers have proposed legislation to prohibit officials from holding encryption currencies.

Clarification of Misunderstandings about Blockchain Technology and Its Business Connections

In response to media allegations of a special relationship between the exchange behind it and Trump’s family business, World Liberty Financial, Jillian countered with a simple analogy: “Just because I posted information on Craigslist does not mean I have a special relationship with the former CEO of Craigslist.” She pointed out that the USD1 stablecoin is developed based on BNB Chain but also operates on several other public chains and has been listed on multiple exchanges, including major CEXs. This openness is precisely the essential characteristic of Blockchain technology.

Technical analysis shows that the USD1 stablecoin indeed adopts the standard ERC-20 token format, with reserve assets being 1:1 U.S. Treasury bonds, which is fundamentally no different from other major stablecoins. Blockchain records indicate that the trading volume of this stablecoin on this platform accounts for less than 15%, far below its performance on other mainstream CEXs. These facts undermine the allegations that the exchange provides special privileges to the Trump family project.

However, critics point out that the relevant exchange did provide promotional support during the early launch of USD1, including recommending it to 275 million users in platform announcements, a treatment not all projects can receive. At the same time, the $2 billion investment settled through USD1 by the MGX fund did indeed occur within the time window around the pardon decision, making this timing coincidence difficult to fully explain by technical factors.

Political Response and Legislative Counterattack

The reaction from the Democrats was exceptionally strong. Senator Elizabeth Warren pointed out that “the request for a pardon coincides with the financial entanglements of a certain CEX with the president's family business, raising urgent concerns about the integrity of the judicial system.” She particularly emphasized that CZ's pattern of behavior, funding Trump's stablecoin and lobbying for clemency after pleading guilty to criminal money laundering charges, is disturbing.

More aggressive legislative countermeasures are brewing. Congressman Ro Khanna announced plans to introduce a bill that would prohibit elected officials from holding or issuing cryptocurrencies, directly responding to what he calls “blatant corruption.” If this proposal passes, it will directly affect several members of Congress who have publicly held cryptocurrencies, including Senator Ted Cruz and Congressman Nancy Mace, who are reportedly holding Bitcoin.

The White House is fully defending the pardon decision. Spokesperson Carolyn Levitt stated that the pardon was thoroughly reviewed by lawyers and is a correction to “the Democrats' heavy-handed crackdown on the encryption industry.” She emphasized that the Trump administration is committed to making the United States the “world's encryption capital,” and the pardon of CZ is a component of this strategy.

Market Impact and CEX Strategic Adjustments

The pardon decision has had a substantial impact on the market. The relevant exchange is actively exploring plans to return to the U.S. market, considering integrating an independent U.S. branch into its global operations or directly opening its main platform to U.S. users. This move could reshape the competitive landscape of global exchanges, especially considering that the exchange's global daily trading volume still maintains a scale of $65 billion.

From a regulatory perspective, the signal conveyed by the pardon may encourage other encryption companies to seek similar political connections. Reports have indicated that several encryption projects are strengthening ties with politicians from both parties, including through donations to political action committees and hiring former government officials as lobbyists. This trend of politicization may further blur the boundaries between industry innovation and political interests.

CZ himself expressed gratitude for the pardon, promising to “do everything possible to help the United States become the world's cryptocurrency capital and promote the global development of Web3.” He denied directly funding Trump's stablecoin project, stating that competitors were spreading “misinformation.” However, he did not specify the exact level of business dealings between the CEX and World Liberty Financial.

Analysis of the Politicalization Trends in Encryption Regulation

The CZ pardon case marks a new phase of highly politicized regulation of encryption in the United States. Traditionally, financial regulation is based on technical rules and precedents, but this case shows that political considerations may override legal consistency. During the 2024 election, Trump's team has clearly embraced the encryption industry, while the Democrats tend to favor stronger regulation, and this partisan divide has been further exacerbated by the CZ case.

Historically, the application of presidential pardon powers in financial crime cases is extremely rare. Compared to the controversies surrounding the 2001 Marc Rich pardon case, the CZ case is even more complicated due to its involvement in the emerging technology sector. The cross-border and anonymous nature of Blockchain technology makes it difficult for regulatory agencies to obtain the evidence chain found in traditional financial investigations, creating room for political interference.

The international influence cannot be ignored. Crypto-friendly jurisdictions such as the UAE and Singapore are closely monitoring the evolution of U.S. policies, preparing to attract U.S. crypto companies considering relocation due to political uncertainty. The MGX fund's $2 billion investment through USD1 indicates that Middle Eastern capital is actively seeking opportunities amid U.S. political polarization.

Legal and Industry Reactions

Legal experts have differing opinions on the long-term impact of the pardon. Some lawyers believe it will weaken the deterrent effect of the Department of Justice in prosecuting encryption violations in the future, especially considering that CZ only served 4 months in prison, while the initial recommendation was a 3-year sentence. Other experts point out that the pardon does not affect the $4.3 billion fine paid by the relevant CEX, and the Department of Justice has established regulatory authority through this case.

The internal reactions within the encryption industry are similarly mixed. Large institutions express concerns about rising political risks, believing that the pardon case may further embroil the industry in partisan struggles. In contrast, startups generally welcome any signals that alleviate regulatory pressure, especially the Trump administration's clear pro-encryption stance.

From a compliance perspective, a pardon may prompt exchanges to reassess their anti-money laundering investments. If the consequences of the most severe violations can be mitigated through political connections, the business incentive to establish a comprehensive compliance system may weaken. This potential change runs counter to the global trend of strengthening anti-money laundering standards.

Future Outlook and Risk Warning

The development of the CZ clemency case will depend on several key factors: the depth and outcome of the congressional investigation, changes in the political landscape after the 2024 elections, and the specific plans for related CEX to return to the US market. If the Democrats win in the 2026 midterm elections, it may drive stricter ethics rules for encryption officials, limiting political donations from the industry.

For market participants, being aware of political risk has become a new dimension of encryption investment. It is recommended that companies seek a balance between political lobbying and compliance investment, avoiding excessive reliance on political connections while neglecting substantial compliance building. Investors should assess the political risk exposure of the projects they invest in, especially those closely related to specific politicians.

From a broader perspective, the CZ case reflects the tension between digital assets and traditional governance structures. The global nature of blockchain technology contrasts with the national boundaries of political systems, the certainty of code rules is at odds with the flexibility of legal interpretation, and the decentralized concept conflicts with the need for centralized regulation. These contradictions erupted in the controversy over the amnesty, signaling the arrival of a more complex regulatory environment.

Event Conclusion

When blockchain meets politics, and when code rules collide with the discretion of human rights, the CZ pardon case has transcended personal fate, becoming a touchstone for the relationship between the encryption industry and traditional power structures. This controversy is not only about the freedom of an entrepreneur, but also about how new technology can find its footing within an old system. In the eternal tension between innovation and regulation, perhaps the real challenge lies not in choosing a side, but in finding a path that can protect the public interest without stifling progress—and this path is destined to gradually emerge through debate and controversy.