CZ sues Elizabeth Warren for defamation! Lawyers argue over the classification of Money Laundering, legal battle begins.

Senator Elizabeth Warren's lawyer refuted the allegations made by Binance founder CZ, who claimed that Warren stated in a letter obtained by Punchbowl News that CZ admitted to committing Money Laundering, constituting defamation. The letter argued that Warren's statement was “completely accurate” and not made with malice, thus not constituting defamation.

Lawyer Warren retorts that the statement is completely accurate

The lawyer of U.S. Senator and Senate Banking Committee Democratic leader Elizabeth Warren refuted the allegations that she defamed CZ, the founder of Binance, in a statement made shortly after President Trump pardoned him. Warren's lawyer argued in a letter obtained by Washington D.C. media Punchbowl News that the statement “is true in all respects.”

In the letter, Warren's lawyer Ben Stafford responded to the defamation lawsuit threat posed by CZ's lawyer Teresa Goody Gillan last week. The lawsuit stems from comments made by Warren after CZ received a pardon, in which she claimed on the X forum that CZ “admitted to committing Money Laundering.” “Senator Warren accurately stated publicly and widely reported facts,” Stafford wrote in the letter, adding, “Mr. Zhao pleaded guilty to the criminal charges brought by the Department of Justice through the indictment and was consequently sentenced to imprisonment.”

CZ has challenged Warren's remarks, stating in a post that quoted her comments: “There has been no change regarding Money Laundering at all.” This response reveals the core of the controversy: what constitutes a “money laundering offense”? Is it the narrow criminal money laundering charges, or the broader violations of anti-money laundering regulations? Goodie Gillen previously told the New York Post that if Senator Warren refuses to retract her comments, the former CEO of Binance plans to file a defamation lawsuit against her immediately.

“Mr. Zhao will not remain silent in the face of a U.S. senator abusing their power by repeatedly making defamatory statements that damage his reputation and cause him further harm,” wrote Gudi Giran in the letter. This strong wording shows the level of seriousness with which the CZ camp regards this matter, as well as their belief that Warren's accusations have crossed the line of political criticism.

Regulatory Violations or Criminal Money Laundering Legal Qualification Controversy

Gudi Jilin claimed in the letter that CZ “only acknowledged one regulatory charge - the failure to implement an effective anti-Money Laundering program under the Bank Secrecy Act,” and refuted Warren's statement regarding the “criminal Money Laundering charges.” However, Stafford argued in the letter that CZ “indeed admitted to violating the Bank Secrecy Act - a law described by its enforcement agency as 'the first and most comprehensive anti-Money Laundering law in our country',” and pointed out that “there is no 'regulatory penalty'.”

The core of this controversy lies in the differences in legal characterization. CZ's lawyer emphasized that what he acknowledged was “the failure to implement an effective anti-money laundering program,” which legally constitutes a failure of regulatory compliance, rather than active participation in money laundering activities. This distinction is crucial, as the former implies management negligence and systemic flaws, while the latter suggests intentional facilitation of the flow of criminal funds.

However, Warren's lawyer pointed out that the Bank Secrecy Act itself is an anti-money laundering law, and violating that law is a breach of anti-money laundering regulations. From this perspective, calling CZ “acknowledging money laundering” is not inappropriate in a broad sense. This divergence in legal interpretation makes the outcome of the defamation lawsuit ambiguous.

Legal Controversy Focus of CZ's Plea

CZ Camp Viewpoint: Only recognize regulatory violations of “failure to implement AML plans”, not criminal Money Laundering.

Warren's Camp View: Violating the Bank Secrecy Act is equivalent to violating anti-money laundering laws, which is tantamount to money laundering.

Core Legal Dispute: Regulatory Compliance Failure vs. Qualitative Difference in Actively Assisting Money Laundering

Key Issue: Whether Warren's statements constitute “false factual statements” and “malice”

“Even if we assume that absolute immunity would not lead to such defamation lawsuits, Mr. Zhao still needs to prove the elements of the case. Public figures like Mr. Zhao cannot win a defamation lawsuit if they cannot provide evidence that the defendant made false factual statements out of malice,” Stafford wrote in the letter. “As stated below, Senator Warren's statement is completely accurate. In any case, the standard is intended to protect freedom of speech.”

The High Burden of Proof in Defamation Lawsuits Involving Public Figures

Stafford's argument reveals the key legal principle in defamation lawsuits: for public figures to win, they must prove that the defendant's statement is not only false but also made with “actual malice.” The definition of actual malice is: the defendant knew the statement was false or acted with reckless disregard for its truth. This is an important standard for protecting freedom of speech under the First Amendment of the United States Constitution.

For CZ, to win in the defamation lawsuit, he needs to prove: first, that Warren's statement is a factual statement rather than an opinion. Second, that the statement is legally false. Third, that Warren knew it was false or acted with extreme disregard for its truth when making the statement. All three of these elements are essential, and the burden of proof lies with the plaintiff (CZ).

Warren's legal strategy cleverly transforms the controversy into a matter of legal interpretation. They acknowledge that CZ did indeed plead guilty, and the dispute lies solely in how to describe the charge. Since the Bank Secrecy Act is at the heart of anti-money laundering regulations, calling a violation of that law a “money laundering charge” has some semantic reasonableness. Even if the court finds that this description is technically inaccurate, it would be difficult to prove that Warren was “knowingly false” or “recklessly indifferent.”

“Her X Post does not contain a statement—nor should it be interpreted as a statement—acknowledging that he has committed any other Money Laundering offenses,” wrote Stafford in the letter. This clarification attempts to narrow Warren's statement to the scope of CZ's actual guilty plea, avoiding being classified as false statements. At the same time, it emphasizes the anti-money laundering nature of the Bank Secrecy Act, providing a legal basis for the description of “Money Laundering offenses.”

The Boundaries of Freedom of Speech and Reputation Protection

From a legal strategy perspective, CZ faces multiple challenges in filing a defamation lawsuit. The first is the issue of “absolute immunity.” Statements made by U.S. congressional members in the course of their duties enjoy absolute immunity from civil litigation. If the court determines that Warren's statements were made in the performance of his senatorial duties (such as overseeing financial regulation), the lawsuit may be dismissed at the procedural stage.

Secondly, there is the boundary of factual statements. It is an undisputed fact that CZ has indeed pleaded guilty and served time. The controversy lies in whether the description of the plea content is accurate. Under U.S. law, a reasonable interpretation of public records is typically protected by freedom of speech. As long as Warren's statements have a reasonable factual basis (i.e., CZ did indeed violate anti-money laundering regulations), it is difficult to classify them as defamation even if the wording is not precise.

The third is the proof of actual malice. Warren, as a long-time critic of the cryptocurrency industry, has been open and consistent in her stance as a senator. It is nearly impossible to prove that she specifically targeted CZ in this statement and published it while knowing it to be false. A more likely explanation is that Warren, based on her understanding of the law, believes that violating the Bank Secrecy Act constitutes Money Laundering, and thus made that statement.

From a political perspective, this legal dispute also reflects the divided attitude of the U.S. political sphere towards the cryptocurrency industry. Warren, representing the progressive wing of the Democratic Party, has long advocated for increased regulation of cryptocurrencies. Trump, on the other hand, promised during his campaign to be the “crypto president” and pardoned CZ after taking office. CZ's defamation threat against Warren is, to some extent, a counterattack by the cryptocurrency industry against anti-crypto politicians. Regardless of the outcome, this lawsuit will become a landmark event in the game between the cryptocurrency industry and regulators.

For the cryptocurrency community, the focus of this controversy should not be limited to legal technicalities, but rather consider the regulatory philosophy behind it. The core issue of CZ's sentencing is that Binance failed to establish an effective Money Laundering system, resulting in the platform being used for illegal fund movements. Regardless of how it is legally characterized, the consequences of this regulatory failure are real. For the cryptocurrency industry to gain mainstream acceptance, it must find a balance between compliance and innovation.