Warren Rejects CZ Defamation Threat Over Money Laundering Post

Senator's Lawyer Says Claim Lacks Merit in Legal Response

US Senator Elizabeth Warren has dismissed a defamation lawsuit threat from Binance founder Changpeng Zhao through her legal counsel, calling the potential claim "without merit." The dispute centers on Warren's social media statements about Zhao's criminal guilty plea and subsequent presidential pardon.

The Defamation Threat Against Warren

Zhao's attorney, Teresa Goody Guillén, threatened legal action against Senator Warren unless she removed an October 23 social media post. The lawyer claimed Warren made defamatory statements that damaged Zhao's reputation regarding corruption allegations related to former President Donald Trump's pardon.

The letter demanded Warren retract her statements or face a lawsuit pursuing all available legal remedies to address what Guillén characterized as false statements.

Warren's Legal Team Responds

Ben Stafford, representing Senator Warren, responded in a letter obtained by Punchbowl News on Sunday. He argued that any defamation claim would fail because Warren's statements were truthful and based on publicly available information.

Stafford emphasized that the law Zhao pleaded guilty to violating is an anti-money laundering statute, making Warren's characterization accurate. He noted that public figures like Zhao must prove actual malice and false statements to succeed in defamation cases.

The Core Dispute Over Money Laundering Claims

Warren's controversial post stated that Zhao pleaded guilty to a criminal money laundering charge and served prison time. Zhao quickly disputed this online, insisting there were no money laundering charges against him.

The factual record shows Zhao pleaded guilty in November 2023 to failing to maintain an effective Anti-Money Laundering program at Binance. This violation of the Bank Secrecy Act led to a four-month prison sentence handed down by a Seattle federal court in April 2024.

World Liberty Financial Connection Raises Questions

Warren's post also referenced Zhao's alleged role in financing President Trump's stablecoin venture and lobbying for a pardon. These claims contributed to broader criticism of Trump's decision to pardon Zhao.

Multiple news outlets reported that Binance played a role in creating World Liberty Financial's stablecoin USD1. The same stablecoin later featured in a two billion dollar deal where Emirati state-owned investment firm MGX purchased a stake in Binance in March.

Expensive Lobbying Effort Preceded Pardon

Reports indicate Zhao's pardon followed an extensive, months-long lobbying campaign. Binance and its legal team invested significant resources to influence key figures in Trump's inner circle before the pardon was granted.

This lobbying effort has drawn scrutiny from Senate Democrats who demanded answers about the pardon's circumstances and potential conflicts of interest.

Legal Standards for Public Figure Defamation

Stafford's response letter outlined the high legal bar Zhao must clear to prevail in any defamation lawsuit. As a public figure, Zhao would need to prove Warren published false statements with actual malice, meaning knowledge of falsity or reckless disregard for the truth.

Warren's lawyer argued her statements accurately represented publicly reported facts about Zhao's guilty plea to violating anti-money laundering law. The post did not claim Zhao pleaded guilty to any other money laundering charge beyond the Bank Secrecy Act violation.

Senate Resolution Adds Pressure

Beyond the social media post, Zhao's lawyer also took issue with Warren's Senate resolution seeking to denounce Trump's pardon. The resolution represents another front in Warren's campaign to question the appropriateness of pardoning Zhao given his criminal conviction.

The legal threat aims to silence Warren on both the social media and legislative fronts, though her counsel maintains she exercised her rights to comment on matters of public concern.

What Happens Next

Warren has shown no indication she will retract her statements or remove her social media post. Her legal team's confident response suggests they believe any lawsuit would be dismissed under defamation law standards for public figures.

Zhao must now decide whether to follow through on his threat and file a formal defamation lawsuit, which would require proving actual malice and false statements in court. Legal experts note such cases face significant hurdles when brought by public figures against elected officials commenting on criminal proceedings.

The dispute highlights ongoing tensions between crypto industry leaders and regulatory critics in Washington as digital asset oversight remains a contentious political issue.

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