Written by: Lawyer Xiao Za's Team

On October 23, the White House officially announced that Trump exercised his presidential pardon power to pardon Binance's former CEO, Zhao Changpeng. This event has caused a stir in the cryptocurrency community, with both confusion and surprise regarding the event itself, as well as reflections on its future impact on the cryptocurrency industry.

Today, the Xiao Za team will discuss the U.S. pardon system and how this system played a role in the pardon of Zhao Changpeng.

I. "Comparable to a King" — Unrestricted Presidential Pardon Power

The United States operates under a federal system, which means that the pardon power is also dualistic, with the federal president and state-designated institutions exercising their respective pardon powers.

At the federal level, Article II, Section 2, Clause 1 of the U.S. Constitution explicitly states: "The President… shall have Power to grant Reprieves and Pardons for Offenses against the United States, except in Cases of Impeachment." This means that the U.S. president can exercise pardon power for any federal crime except in impeachment cases.

At the state level, how pardon power is exercised is mainly determined by state constitutions, with four primary forms: exclusive to the governor, exclusive to a committee or advisory group, shared by the governor as a committee member, or the committee or advisory group's opinions being binding on the governor's pardon power.

In this section, the Xiao Za team will focus on the most well-known and typical aspect of the U.S. pardon system, the presidential pardon power, to demonstrate how the U.S. pardon system operates and takes effect.

According to the U.S. Federal Code regarding presidential pardon procedures, a pardon is applied for by the offender themselves, with the main reasons being acceptance of criminal responsibility, sincere remorse, making amends for the crime, and the ability to live a good life. Additionally, the application must include at least three written statements from character witnesses.

Pardon applications are processed by the Office of the Pardon Attorney under the Department of Justice, which is tasked with assisting other agencies (such as the FBI) in investigating the pardon application. When considering whether to recommend a pardon, relevant agencies and victims' opinions should also be heard, and a recommendation report on whether to grant the pardon is made, which is then submitted to the Deputy Attorney General for review and signature before being forwarded to the president's advisor. The president's advisor presents it to the president at an appropriate time for a decision on whether to grant the pardon.

From the completeness of this procedure, it seems that the presidential pardon power is subject to strict procedural limitations, but in fact, this procedure only restricts offenders who wish to apply for a pardon.

If the president wishes to exercise this power to pardon someone on their own, they will face almost no restrictions, except for the constitutional stipulations of "limited to federal crimes" and "excluding impeachment cases." In the case of Eparte Garland (1866), the U.S. Supreme Court also clearly stated that the president's pardon power is "broad and unrestricted."

The reason the president enjoys such extensive power is partly due to historical influences from the British monarchy during colonial times, where as early as the 7th century, English kings had the power to pardon criminals; and partly due to the separation of powers framework, which established an independent discretionary power for the executive branch to balance legislative and judicial powers, ensuring mercy can be granted to victims of unjust trials when necessary.

After exercising the pardon power, its legal effects mainly include two parts: first, the exemption from all or part of the declared sentence, and second, the restoration of all rights prior to conviction, including the right to vote and be elected, the right to hold public office, and the right to engage in specific professions. Also in the Eparte Garland (1866) case, the U.S. Supreme Court declared that a pardon can "clear the crime and eliminate its legal consequences," making the pardoned individual legally "as if they had never committed a crime."

However, despite the exemption from the declared sentence, the conviction itself cannot be erased, and the facts of the crime cannot be removed; the moral stigma associated with the crime may linger in the public's mind.

II. The Power Dynamics Behind Zhao Changpeng's Pardon

After gaining insight into the U.S. pardon system, the Xiao Za team hopes to help everyone understand how this system played a role in the pardon of Zhao Changpeng by Trump.

Let’s turn our attention to 2023, when, against the backdrop of tightening global cryptocurrency regulatory policies, the U.S. Department of Justice brought criminal charges against Zhao Changpeng and Binance, with the core charge being the violation of the U.S. Bank Secrecy Act, primarily pointing to their failure to establish effective anti-money laundering (AML) and know your customer (KYC) systems.

In response to the charges, Zhao Changpeng reached a plea agreement with the U.S. Department of Justice, personally paying a $50 million fine, while Binance paid up to $4.3 billion in settlement fees.

In April 2024, a federal court in Seattle sentenced Zhao Changpeng to four months in prison. After serving his sentence, he left the U.S. and no longer served as CEO of Binance. Until October 23, 2025, when Trump exercised his presidential pardon power to pardon Zhao Changpeng, reigniting widespread attention on this previously concluded judicial case.

Trump's exercise of presidential pardon power in this instance is a typical case of self-exercising the pardon power, rather than being initiated by the offender, and the reasons and motivations for exercising the pardon power were entirely determined by Trump himself, with no procedures or institutions able to restrict this power.

So, what specific effects does Trump's pardon of Zhao Changpeng have?

• First, Zhao Changpeng has already served all declared sentences (four months in prison), so the pardon does not reduce his time in prison;
• Second, the $50 million fine paid by Zhao Changpeng in the plea agreement will not be refunded by the U.S. government due to the pardon;
• Third, the substantive impact of the pardon mainly lies in the restoration of his industry access qualifications, which is the "restoration of rights" effect.

Because the U.S. Bank Secrecy Act typically prohibits individuals with criminal records from participating in the management of regulated financial institutions or establishing cooperative relationships with U.S. financial institutions. After the pardon, this restriction will be lifted, allowing Zhao Changpeng to re-enter the cryptocurrency financial industry, including taking on executive roles in fintech companies and restoring business dealings with U.S. financial institutions.

III. The Aftermath of Zhao Changpeng's Pardon on the Cryptocurrency Industry

Zhao Changpeng's pardon has both short-term and long-term impacts on the cryptocurrency industry.

On one hand, in the short term, Zhao Changpeng's pardon has a boosting effect on Binance and the cryptocurrency market. Following the announcement of the pardon, the price of Binance's native token BNB surged by 8%, and mainstream cryptocurrencies like Bitcoin also rose simultaneously, reflecting investors' optimistic expectations for Binance and the industry's future.

However, uncertainties still exist, as Binance still faces strict regulatory scrutiny, and its $4.3 billion fine and operational ban remain in effect. Returning to the U.S. will still require effort. If Binance fails to meet compliance expectations, the short-term gains may be difficult to sustain, and investors should be wary of market correction risks after the market sentiment wanes.

On the other hand, in the long term, this event may be seen as a signal from Trump indicating a relaxation of U.S. regulatory policies. The Trump administration views the pardon of Zhao Changpeng as an end to Biden's war on cryptocurrencies, suggesting that the U.S. may shift from being a cautious regulator to an active innovator in the cryptocurrency field, solidifying its leadership position in the cryptocurrency industry.

However, it cannot be ignored that this pardon has also sparked controversy over "political favoritism," as Binance has close ties to the Trump family's stablecoin project USD1. Whether there is "quid pro quo" involved raises concerns, especially as the public increasingly values compliance and independence in cryptocurrency regulation; such actions exacerbate worries about the fairness of regulation in the cryptocurrency industry.

In Conclusion

The pardon of Zhao Changpeng once again reflects the high correlation between the cryptocurrency market and global politics today, where political winds can directly influence market trends and long-term development.

The Xiao Za team also reminds everyone to pay attention to the long-term trends in global political and economic situations while seizing investment opportunities brought by market sentiment after hot topics.

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