Why Binance Controls Nearly All of USD1 — and Why Critics Are Raising Alarms

Key Takeaways

Binance reportedly controls about 87% of the circulating supply of USD1, a stablecoin linked to WLFI
The concentration has prompted scrutiny from analysts and online commentators over governance, liquidity, and potential conflicts of interest.
Some critics have drawn links between Binance’s growing exposure to USD1 and a presidential pardon granted to founder Changpeng Zhao.

Binance’s expanding involvement with World Liberty Financial (WLFI) and its USD1 stablecoin has drawn renewed attention from the crypto community, following reports that the exchange now holds a dominant share of the token’s circulating supply.

USD1, launched in March 2025, has grown rapidly to become one of the largest stablecoins by market capitalization.

As of early February 2026, its total supply stands at approximately $5.4 billion, reflecting strong demand and aggressive distribution efforts.

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Binance Dominates USD1 Holdings

According to blockchain analytics cited by Arkham Intelligence and reported by Forbes, Binance controls roughly 87% of USD1’s circulating supply.

This equates to about $4.7 billion held across Binance-managed wallets and customer accounts.

Such concentration is uncommon among major stablecoins.

Even FDUSD, another stablecoin closely associated with Binance, has a significantly lower proportion—around 50%—held on the exchange.

Analysts note that USD1’s reliance on a single platform raises questions about market resilience, liquidity management, and operational risk.

The concentration has been driven in part by Binance-led incentives.

In late January 2026, the exchange promoted USD1 through a $40 million WLFI token airdrop, encouraging users to hold and trade the stablecoin.

WLFI later transferred corresponding token allocations to Binance, further deepening the commercial relationship.

Binance’s U.S. subsidiary, Binance.US, reportedly holds a negligible amount of USD1—roughly $1,100. It manages a majority of its tokens offshore.

This structure aligns with restrictions imposed following Binance’s 2023 settlement with the U.S. Department of the Treasury.

Governance and Market Risks

Industry observers have highlighted potential risks stemming from the concentration.

With a single exchange controlling most of the circulating supply, USD1 could be more vulnerable to liquidity disruptions or operational decisions Binance makes.

Unlike decentralized stablecoins such as DAI, USD1’s ecosystem is closely tied to both WLFI and Binance, limiting diversification across custodians.

Supporters argue that centralized distribution can improve efficiency and adoption.

They warn that excessive concentration may undermine confidence in the redemption process or price stability during periods of market stress.

Pardon Speculation Fuels Debate

Beyond market structure concerns, the situation has fueled broader debate due to the timing of Binance’s expanded involvement with USD1.

Changpeng Zhao (CZ), Binance’s founder, was sentenced in 2024 for violations of U.S. anti-money laundering regulations, leading to a fine exceeding $4 billion for the exchange.

He later received a presidential pardon from Donald Trump in October 2025.

Since then, some commentators have speculated about a possible connection between the pardon and Binance’s subsequent promotion and accumulation of USD1.

Following the pardon, Binance increased USD1-related promotions, including incentives on Binance.US.

Zhao also announced a $1.8 billion donation aimed at supporting crypto adoption initiatives under the Trump administration, further intensifying public scrutiny.

Supporters of the partnership describe it as a legitimate business alignment consistent with Trump’s pro-crypto policy stance.

Critics, however, point to the close timing and overlapping legal representation between WLFI and parties involved in the pardon as factors warranting closer examination.

Community Reaction Highlights Ongoing Scrutiny

Commentators and independent researchers across the crypto community have reacted in mixed ways, raising concerns about the concentration of USD1 holdings and the timing of recent developments involving Binance and WLFI.

Investigative YouTuber Coffeezilla outlined a timeline discussing USD1’s structure and potential revenue generation, noting that the stablecoin’s reserves are reportedly backed by U.S. Treasuries.

In a widely shared post, he estimated that the structure could generate between $60 million and $80 million annually for WLFI, depending on redemption activity.

Separately, New York Times reporter Kenneth P. Vogel observed that Binance.US began promoting trading of USD1 shortly after Changpeng Zhao received a presidential pardon.

While Vogel did not allege wrongdoing, the timing contributed to broader public discussion around the relationship between political developments and commercial activity in the crypto sector.

Independent journalist Lola highlighted the timing of Binance’s acceptance of a large USD1 position ahead of Zhao’s presidential pardon.

They noted that the attorney who led the pardon effort has also represented WLFI and one of its founders.

While the overlap has fueled online speculation, no evidence has emerged showing coordination between the pardon process and Binance’s commercial activity.

Other analysts and social media commentators have offered more critical interpretations, framing the sequence of events as potentially problematic.

These views, however, represent opinion and speculation rather than verified findings.

To date, no regulatory body has announced an investigation or presented evidence indicating coordination between the pardon process and Binance’s involvement with USD1.

The range of responses underscores ongoing concerns about transparency, governance, and concentration risk within the stablecoin market, particularly as crypto assets become increasingly intertwined with political and regulatory developments.