New York Times: USD1 Has Become the Trump Family's Cryptocurrency Engine
Original Title: Binance Gives Trump Family's Crypto Firm a Leg Up
Original Author: David Yaffe-Bellany, The New York Times
Translation: Peggy, BlockBeats
Editor's Note: Against the backdrop of Trump's return to the center of power and a shift in U.S. crypto policy, the stablecoin project involving his family is rapidly expanding. The technical support and incentives provided by Binance have quickly propelled World Liberty Financial forward.
How will this structure, where the exchange's business incentives, stablecoin's profit model, and top-level policy-making authority are intertwined, impact the rules and boundaries of the crypto market?
Below is the original text:
Binance launched a series of marketing campaigns to encourage its users to purchase the stablecoin issued by World Liberty Financial. Image Source: Reuters / Marco Bello
World Liberty Financial, the cryptocurrency startup founded by the Trump family, reached a significant milestone last month. The total circulation of the company's flagship digital token surpassed $5 billion, propelling it into the ranks of the world's largest cryptocurrencies.
"Another milestone achieved," the company announced on social media. The president's son, Eric Trump, also celebrated the moment with a series of fire emojis.
This achievement was largely thanks to the collaboration between World Liberty and the cryptocurrency exchange platform Binance. Binance, founded by billionaire Changpeng Zhao, who was pardoned by President Trump last year, has played a key "engine" role in the Trump family's business landscape over the past two months.
As the world's largest cryptocurrency exchange, Binance has launched a series of marketing campaigns in the past two months to encourage users to purchase USD1, the stablecoin issued by World Liberty. This type of cryptocurrency is pegged 1:1 to the U.S. dollar, making it more convenient for payments and transactions.
According to data analytics firms Arkham and Nansen, approximately 85% of the circulating $5 billion USD1 tokens are held in Binance accounts, even though the exchange is not open to U.S. users.
The co-founder of the encrypted data company ChainArgos, Jonathan Reiter, stated: "Most of the funds are concentrated on Binance, and they have been almost always there. This is their primary trading venue."
The relationship between World Liberty and Binance has raised significant concerns among ethics experts and some members of Congress. They believe that this collaboration presents a serious conflict of interest, as President Trump is now both a key figure in the cryptocurrency field and the industry's top policymaker. The White House has openly supported legislation currently under congressional review that would lower the barriers for cryptocurrency exchanges to operate in the United States.
In October of last year, President Trump pardoned Zhao Changpeng. Prior to this, Zhao and his company pleaded guilty in 2023 to violating anti-money laundering regulations, leading Zhao to serve a four-month prison sentence. Despite his criminal record, Zhao has been allowed to continue as a major shareholder of Binance, and this pardon could pave the way for Binance to enter the as yet unauthorized U.S. market.
Since the pardon, the connection between Binance and World Liberty has deepened further; at the same time, this cryptocurrency company run by the Trump family is facing increasing political pressure from the Democratic Party.
In October of last year, President Trump pardoned Binance founder Zhao Changpeng. Previously, Zhao had served a four-month prison sentence for money laundering violations. Image Source: The New York Times / Tamir Kalifa
In December, Binance announced that its users could withdraw and exchange stablecoins issued by other institutions for USD1 free of charge. This concession is significant because transaction fees are a major source of income for cryptocurrency exchanges. In essence, Binance has significantly reduced the cost and barrier for users to purchase tokens issued by a company associated with the President's family.
Binance also offered users the opportunity to earn interest by holding USD1, a promotion that is currently the subject of intense legislative debate in the U.S. Congress. On January 22nd, Binance announced that users holding USD1 in their platform accounts would collectively share a $40 million reward.
Over the following week, the global trading volume of USD1 surged, with a cumulative increase of nearly $2 billion.
A stablecoin is a highly profitable sector in the crypto industry. Issuers like World Liberty absorb funds from traders, issue them tokens, invest the funds to generate returns, and keep the profits. Exchanges play a key role in facilitating user purchases of these tokens.
According to World Liberty's financial reports, most of its deposits are currently invested in government money market funds. These funds have an annualized return rate of around 4%, meaning that with a $5 billion deposit base, the potential annual income could reach $200 million.
A spokesperson for World Liberty stated that the promotional incentives were funded by Trump's crypto company, not Binance, and referred to this as a stablecoin issuer's "standard practice."
He said: "World Liberty provided marketing budgets to Binance and other non-U.S. digital asset exchanges, and it is entirely up to these platforms how to use them."
A female spokesperson for Binance responded by saying that "it is not uncommon for large exchanges to hold significant amounts of specific tokens," and that Binance also conducts promotional activities for various tokens, not just USD1.
She added: "We take legal and regulatory requirements very seriously and comply with the relevant laws and regulations in the jurisdiction where we operate."
Zhao Changpeng's lawyer stated that "there is no conflict of interest or exchange of interests." A female spokesperson for the White House also stated that Trump's assets have been placed in a trust managed by his children, with "no conflict of interest."
Since Trump returned to the center of power last year, he has spearheaded a comprehensive policy shift by the U.S. government towards the crypto industry, ending the regulatory crackdown that began in his first term and embracing an industry that was once seen as a threat to the U.S. financial system.
At the same time, Trump and his children have built a vast crypto business network. Trump himself promoted a token called $TRUMP; his two eldest sons co-founded a publicly traded Bitcoin mining company, American Bitcoin.
At the heart of this family's crypto empire is World Liberty. The company is jointly operated by Trump's sons and the family of White House Middle East envoy Steve Witkoff. According to Trump's financial disclosure documents, he himself actually holds shares in World Liberty.
Since its inception, Binance has played a key role in World Liberty's operations.
During the development phase of USD1, Binance provided some underlying technical support for the stablecoin. A spokesperson for World Liberty told The New York Times last year that this collaboration "did not result in any compensation."
Binance also participated in a significant early transaction for World Liberty. In early 2025, a company named MGX, backed by the government of the UAE, announced a $20 billion investment in Binance.
At the time, Binance stated that this transaction was settled entirely in USD1, marking the largest investment ever made using a stablecoin.
World Liberty CEO Steve Witkoff's son, Zach Witkoff, unveiled this agreement at a conference in Dubai in May of last year.
Former President Trump's two sons, Donald Trump Jr. and Eric Trump, joined Zach Witkoff as business partners in World Liberty Financial. Zach is the son of Trump's Middle East envoy, Steve Witkoff. Image Source: Spencer Platt / Getty Images
"We thank MGX and Binance for their trust in us," said young Witkoff at the time, "This is just the beginning."
This transaction first publicly established the link between Binance and World Liberty and immediately raised concerns in Washington about potential conflicts of interest. At the time, Changpeng Zhao was openly seeking a presidential pardon; previously, both he and Binance had pleaded guilty to related crimes, which had enabled terrorist organizations and other criminals to transact on the platform.
"The rent-seeking space inherent in this is shocking – the Trump administration might offer policy favors to the UAE or Binance in exchange for their substantial financial returns," wrote Massachusetts Democratic Senator Elizabeth Warren and Oregon Democratic Senator Jeff Merkley in a letter to U.S. ethics officials last year.
Despite Zhao Changpeng eventually receiving a pardon, Binance itself did not receive any leniency. Zhao is no longer in charge of Binance's day-to-day operations, but retained ownership of the company upon pleading guilty. Today, Binance is led by two co-CEOs, one of whom is co-founder Yi He, who shares children with Zhao Changpeng.
Since Yi He took on this management role in December, Binance has continued its close collaboration with World Liberty.
On December 11, World Liberty announced that Binance would waive fees on part of USD1 trades and use the stablecoin as collateral to support another cryptocurrency.
“Binance is enabling billions of users to more easily access USD1,” Zach Whitcov stated in the announcement at the time.
Twelve days later, Binance launched the “USD1 Booster Program,” offering users up to 20% APY to incentivize holding the stablecoin issued by World Liberty.
In early January, Binance then rolled out a promotional campaign: over a month-long period, weekly rewards were distributed to users holding USD1, funded by a $40 million “mega pool.”
On social media, World Liberty's founding team viewed these incentive measures by Binance as a crucial step in the company's expansion, while also publicly supporting the exchange platform multiple times.
Last month, World Liberty executive Zak Folkman defended Binance on social media, responding to criticism of its role in the recent market downturn. He suggested that these accusations were “an organized smear campaign.”
Some of Binance's promotional initiatives happened to intersect with domestic policy debates in the United States, where Trump himself would hold significant decision-making power on these issues.
Last year, Trump signed legislation known as the “GENIUS Act,” which established relatively friendly regulatory rules for stablecoins. The law clearly prohibits stablecoin issuers (such as World Liberty) from directly offering interest to users.
However, the act left a “loophole”: while issuers cannot pay interest, it did not prohibit exchanges from offering related benefits, creating conditions for similar incentives through commercial arrangements on U.S. platforms. The U.S.'s largest exchange platform Coinbase offers interest on users’ holdings of USDC (issued by Circle).
Currently, Congress is considering a broader bill to comprehensively regulate cryptocurrency exchanges and other areas of the industry. In the related discussions, the banking lobby is urging lawmakers to close this loophole, concerned that these incentive mechanisms will compete with traditional bank deposit accounts.
The specific arrangement details between World Liberty and Binance remain unclear. However, given that these incentives are funded by World Liberty, some experts question: if these promotional activities take place within the U.S., do they comply with the provisions of the GENIUS Act?
Even if reluctantly compliant within the stablecoin legal framework, such operations are precisely the "typical loophole" currently under intense debate in Congress, as former SEC official responsible for crypto affairs Corey Frayer noted.
The White House has intervened to coordinate this dispute, convening a meeting this week between banking and crypto industry representatives in an attempt to reach a compromise. As Binance primarily operates overseas, regardless of Congress's decision, it can continue to offer rewards; but if a law prohibiting incentives is ultimately passed — requiring Trump's signature to take effect — Binance will be unable to launch similar promotions in the U.S. market.
"Due to the presence of World Liberty and USD1, Trump has a direct economic interest in this game," noted Lee Reiners, Duke University's cryptocurrency policy expert.
Welcome to join the official BlockBeats community:
Telegram Subscription Group: https://t.me/theblockbeats
Telegram Discussion Group: https://t.me/BlockBeats_App
Official Twitter Account: https://twitter.com/BlockBeatsAsia
