Opinion: The Pardon That Preceded Crypto's Biggest Heist

On October 29, hackers linked to North Korea breached Binance, the world's largest cryptocurrency exchange, and moved more than $6 billion in digital assets out of its custody in roughly twenty minutes. The FBI says the theft, carried out by a group it tracks as TraderTraitor and believes is part of the North Korea-linked Lazarus Group, is now the largest cryptocurrency heist on record, eclipsing the $1.5 billion Lazarus stole from Bybit last year, according to reporting that traced the bureau's attribution. Binance has set aside more than $6.3 billion of its own funds to make depositors whole and says it will not pass the losses on to users, per accounts of the exchange's response.

That is the news. The more uncomfortable fact sits one year in the past. In October 2025, President Trump pardoned Changpeng Zhao, Binance's founder, who had pleaded guilty to a Bank Secrecy Act violation and served four months in prison as part of a 2023 settlement in which Binance itself admitted to federal crimes. The pardon, and the broader unwinding of the settlement's oversight machinery that followed it, removed the Justice Department's seat inside the company at almost exactly the moment a hostile state proved it could still move through Binance's systems at nuclear-program scale. Treating that sequence as coincidence requires ignoring what the 2023 settlement was actually for.

A Settlement Built for Exactly This Threat

When Binance pleaded guilty in November 2023, it was not a garden-variety compliance lapse. The Treasury Department's own announcement of the $4.3 billion global settlement states that Binance executed more than 1.67 million trades between U.S. persons and users in sanctioned jurisdictions — explicitly including North Korea, alongside Iran, Syria and Russian-occupied Crimea — while encouraging American and sanctioned-country users alike to mask their location with VPNs to defeat its own geofencing. The Office of Foreign Assets Control called it the largest settlement in its history, and the Justice Department's own case summary describes the matching set of guilty pleas, from the company and from Zhao personally, as its largest corporate resolution ever paired with a chief executive's guilty plea, per the department's case page. The remedy Treasury and the Justice Department settled on was not simply a fine. It was a five-year independent monitorship, embedded inside the company, with access to Binance's books and systems, precisely because regulators concluded the exchange could not be trusted to police its own exposure to sanctioned actors without one.

North Korea's cyber units have for years been judged by successive U.S. and allied officials to be central to funding Pyongyang's weapons programs through exactly this kind of theft. Binance was not a bystander to that threat. Treasury's own enforcement record names North Korea as one of the jurisdictions its trading architecture serviced. The monitor existed because the government had already concluded this specific exchange needed outside eyes on exactly this kind of exposure.

The Oversight That Went Away

Those eyes did not last. By September 2025, Senate Banking Committee Democrats — Elizabeth Warren, Mazie Hirono and Richard Blumenthal — were pressing Attorney General Pam Bondi over reports that Binance was negotiating to drop its outside compliance monitor altogether, and asking pointed questions about the Trump family's own expanding financial stake in the exchange through World Liberty Financial, the crypto venture run by the president's sons. Their letter to the Justice Department noted that an earlier round of questions had gone unanswered, including whether Binance was in fact complying with its settlement terms. Weeks later, Trump pardoned Zhao outright, with the White House casting the prosecution as part of a Biden-era "war on cryptocurrency." The pardon ended the Justice Department's monitoring of Binance built into Zhao's personal plea, even as Warren and Blumenthal kept pressing Treasury's FinCEN about the health of the parallel oversight the broader settlement required, as late as a resolution Warren and Senator Adam Schiff introduced condemning the pardon the day after it was issued.

"If Congress does not stop this kind of corruption, it owns it."

That was Warren's verdict on the day of the pardon, and it reads differently a year later, after the exchange it concerned absorbed the largest crypto theft in history from the same state actor Treasury had already caught it serving.

What a Laptop and a Loophole Have in Common

None of this means the October 29 breach was itself a sanctions-compliance failure in the narrow sense. Binance has said the intrusion traced to a compromised employee laptop that let attackers reach a service container and push unauthorized withdrawals, and CFTC Chairman Michael Selig has pointed to the hack, in comments urging offshore exchanges to register for U.S. oversight, as a cybersecurity failure rather than a flaw in the underlying blockchain. That is a fair distinction, and it is also beside the point. Oversight of a platform that has already admitted to running sanctioned-jurisdiction trading at scale is not supposed to stop every intrusion; it exists so that when an intrusion happens, there is an entity inside the company, with legal authority and standing access to its books, positioned to see immediately where the money is going and who is positioned to receive it. A monitor cannot stop a phishing email. It can make it much harder for a state actor's take to disappear into the same infrastructure regulators had already flagged as its laundering route.

Defenders of the pardon have a real argument of their own, and it deserves to be stated plainly rather than waved off. Zhao served the prison sentence a federal judge imposed; a personal pardon is a different legal instrument than a corporate consent decree, and Binance's $4.3 billion in settlement obligations technically remain on the books regardless of Zhao's clemency. Treasury's FinCEN monitor, separate from the Justice Department's, was reported to still be in place as of this year. And the crypto industry's broader point — that offshore exchanges will keep drawing nation-state attackers no matter who runs them — is not wrong either. Pyongyang was targeting exchanges well before Zhao's prosecution and will keep doing so after any settlement expires.

But those caveats describe a diminished, not an absent, risk, and diminished was exactly the wrong direction to move a year before the platform's worst-case scenario arrived. The pardon did not just resolve one man's criminal exposure. It arrived in the same season as reporting that the company was shedding its outside monitor and as its most prominent American business partners happened to be the sitting president's own sons.

• Binance depositors are being made whole, by the company's own account, but only because Binance chose to absorb a loss nearly 50% larger than the criminal penalty it paid in 2023.
• Congress is weighing the CLARITY Act and a parallel Senate market-structure bill meant to give the CFTC authority over exchanges like Binance — authority that, this episode suggests, needs to come with mandatory security and custody standards, not just registration paperwork.
• National security officials now have fresh, costly evidence that the laundering pipeline Treasury described in 2023 did not close when the settlement was signed.

What Should Happen Now

Congress does not need to relitigate Zhao's pardon to act on what the hack exposed. Lawmakers on the Banking and Judiciary committees should get a public, on-the-record accounting of whether Binance's compliance monitor — either the Justice Department's or FinCEN's — was functioning on October 29, and if not, why not. Any market-structure legislation that lets offshore exchanges register for U.S. oversight, the approach Selig is now pitching, should condition that registration on enforceable custody, segregation-of-funds and incident-disclosure rules, not simply on a promise to behave. And when a president uses the pardon power to benefit a company his own family has taken a financial stake in, that fact pattern deserves the same scrutiny Congress would apply to any other regulatory giveaway — independent of whether the underlying prosecution was otherwise sound. The $6 billion question is not whether Zhao deserved clemency. It is whether anyone in Washington is still watching the pipe he used to run it through.