Main Points:
- Bloomberg Report Details: Allegations that Binance developed the USD1 stablecoin’s smart contract and aided in a $2 billion transaction.
- CZ’s Response: Characterization of the report as a “hit piece,” threats of defamation suits based on prior victories.
- Historical Legal Context: Review of CZ’s 2022 defamation win against Bloomberg and the 2020 Forbes lawsuit.
- USD1 & Trump Connection: Background on World Liberty Financial’s launch of USD1 on May 22, its ties to Donald Trump, and potential conflicts of interest.
- Stablecoin Market Landscape: Comparison of top stablecoins by market cap, highlighting USD1’s nascent status relative to giants like USDT and USDC.
- Regulatory & Competitive Dynamics: Ongoing U.S. stablecoin regulatory proposals (e.g., Genius Act), and rumors of competitor influence from Coinbase.
- Conclusion & Implications: Assessing reputational, legal, and market impacts for Binance and the broader crypto ecosystem.
1. The Contentious Bloomberg Report
In mid-July 2025, Bloomberg published an investigation claiming that Binance secretly authored the foundational smart contract code for USD1—a stablecoin issued on May 22, 2025, by World Liberty Financial, a firm linked to former President Donald Trump. According to three anonymous sources, Binance not only developed the code but also promoted USD1 to its 275 million users and facilitated a $2 billion UAE-based investment using the coin. Bloomberg further alleged that over 90% of USD1’s supply resides in Binance wallets, potentially generating tens of millions of dollars in annual interest income for the Trump family.
2. CZ’s Forceful Rebuttal
Changpeng “CZ” Zhao took to X (formerly Twitter) to denounce the Bloomberg report as a “hit piece sponsored by a competitor,” labeling it full of “so many factual errors” that he claimed “doesn’t even know where to begin.” He warned that he “might have to sue them again for defamation,” echoing past legal actions in which he successfully challenged Bloomberg’s journalism.
3. A Track Record of Defamation Litigation
This is not CZ’s first courtroom battle over media coverage:
- 2022 Lawsuit vs. Bloomberg (Hong Kong Edition): After Bloomberg’s Modern Media accused Binance of operating a Ponzi scheme, CZ sued and won a retraction and apology, with the publisher donating to charity.
- 2020 Lawsuit vs. Forbes: CZ filed suit after Forbes erroneously linked Binance to illicit activities.
These victories underscore CZ’s willingness to employ litigation to protect his and Binance’s reputation.
4. USD1’s Launch and Trump Ties
World Liberty Financial (WLF), founded by Donald Trump Jr. and Eric Trump, launched USD1 on May 22, 2025. The stablecoin is pegged 1:1 to the U.S. dollar, with reserves purportedly held in short-term U.S. Treasury instruments. Bloomberg’s report suggests a conflict of interest, alleging CZ both developed the code and later sought a presidential pardon from Donald Trump—a claim CZ initially denied in March before admitting in May that he applied for one.
5. Stablecoin Market Context
The stablecoin sector has grown to exceed $250 billion in total market capitalization, dominated by Tether’s USDT and Circle’s USDC, which together control over 85% of the market. By comparison, USD1 remains extremely small and nascent:
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Data as of July 2025: USDT – $153 B; USDC – $60.9 B; DAI – $5.37 B; FDUSD – $1.54 B; USD1 – ~$0.05 B.
6. Regulatory and Competitive Dynamics
In parallel with the Bloomberg saga, U.S. legislators are advancing bills such as the Genius Act and Stable Act, aiming to impose stringent reserve requirements, annual audits, and federal preemption of state rules for stablecoin issuers. These proposals seek to ensure consumer protection and financial stability amid concerns over unbacked or poorly governed tokens.
Additionally, CZ has fueled further controversy by retweeting claims that Coinbase orchestrated the Bloomberg report to hinder Binance’s potential U.S. return—allegations flatly denied by Coinbase’s Chief Legal Officer Paul Grewal.
Conclusion
Binance’s founder, Changpeng Zhao, faces a multifaceted challenge: defending against high-profile Bloomberg allegations that intertwine legal, political, and market dimensions. While CZ’s past legal successes demonstrate his resolve to counter defamatory reporting, this latest dispute unfolds against a backdrop of heightened regulatory scrutiny and fierce competition within the stablecoin arena. USD1’s modest market presence contrasts sharply with industry giants, underscoring both the opportunity and risk of launching politically charged digital assets. As the U.S. stablecoin regulatory landscape crystallizes, all stakeholders—from issuers to institutional investors—will be closely watching the outcome of CZ’s threats and any ensuing litigation, which could set important precedents for crypto-media relations and token governance.
