Senator Warren Rejects CZ Defamation Threat: DOJ's Money Laundering Plea Stands Firm

Senator Elizabeth Warren’s legal team has firmly rejected a defamation threat from Changpeng Zhao, asserting that her tweet accurately reflects the Department of Justice’s (DOJ) description of his guilty plea to money laundering violations.This dispute, stemming from Warren’s post following Zhao’s pardon, highlights ongoing tensions between crypto leaders and U.S. regulators over financial oversight.

The Dispute: Warren’s Tweet vs. Zhao’s Legal Challenge

Warren’s message stated that Zhao “pleaded guilty to a criminal money laundering charge and was sentenced to prison,” linking it to his role in financing a stablecoin and lobbying for a pardon. Zhao’s attorney, Teresa Goody Guillén, demanded a retraction, arguing the statement misrepresented his plea as personal involvement in laundering, threatening legal action for “defamatory statements that impugn his reputation.”

In response, Warren’s lawyer, Ben Stafford, called the claim “without merit,” emphasizing that the offense under the Bank Secrecy Act (BSA) is explicitly criminal. Stafford noted that the DOJ described Zhao’s actions as a “criminal violation” of anti-money laundering laws, punishable by imprisonment. The letter, obtained by Punchbowl News, cited sections 5318(h) and 5322(b)-(e) of the BSA, affirming Warren’s right to repeat public facts under the First Amendment.

• Warren’s Statement: “CZ pleaded guilty to a criminal money laundering charge and was sentenced to prison.”
• Zhao’s Rebuttal: “There were NO money laundering charges.”
• Legal Defense: DOJ filings and BSA confirm criminal nature; no malice or falsity.

DOJ’s Role and Legal Precedent

The DOJ’s 2023 statement framed the resolution as a $4 billion settlement for “anti-money laundering” violations, aligning with Warren’s portrayal. Court documents in United States v. Changpeng Zhao show Zhao admitted to willfully aiding failures in AML procedures, leading to a four-month sentence. Stafford argued that even if sued, Zhao would need to prove falsity and malice, a high bar under Supreme Court protections for public figures.

Broader Implications: Crypto Regulation and Political Influence

The clash underscores friction between crypto innovators and regulators, with Warren criticizing the pardon as “blatant corruption” tied to financial links. It revives debates on AML compliance, as the BSA requires robust programs, and Zhao’s failure constituted a criminal offense. The incident, amid 2025’s regulatory evolution, highlights the need for transparent lobbying and oversight in digital finance.

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In summary, Warren’s rejection of CZ’s defamation threat, citing DOJ’s AML plea, underscores crypto’s regulatory battles, blending politics with 2025’s market dynamics.