The mystery of the richest man in the cryptocurrency world

Changpeng Zhao (CZ), CEO of Binance, is more cautious after the FTX scandal and is under investigation.

Late last year, CZ was called "the smartest person in the cryptocurrency market" thanks to his timely responses to the collapse of the world's third-ranked cryptocurrency exchange FTX . When the exchange encountered a series of problems, he sold the two billion USD worth of FTT tokens he invested, canceling the agreements with the exchange because "the matter was beyond our control and ability to help". At that time, the effects of CZ on FTX were not analyzed in detail.

Now, as the cryptocurrency sector is more tightly squeezed, things related to CZ begin to fall in the sights of the regulator. At the end of March, Binance got into a lawsuit with the Commodity Futures Trading Commission (CFTC) on the grounds that it had circumvented US law. This exchange is also investigated by the US Department of Justice, the US Internal Revenue Service (IRS), the US Securities and Exchange Commission (SEC) as well as a number of regulatory agencies around the globe.

According to experts, the " limelight " that CZ has been trying to avoid for the past time is starting to shine on him after the FTX incident. "Clearly CZ was lurking in the shadows," said Senator Chris Van Hollen. "It's hard to know what Binance is doing, how it works."

Hollen thinks that while a regulated bank like Silicon Valley Bank could still fail, crypto exchanges like Binance are even more worrisome. "In the case of Binance, we don't know anything. It's a mystery box. If things go down, a lot of people will lose a lot of money," he said.

Binance CEO Changpeng Zhao. Photo: Rollingstone

Who is CZ?

CZ is currently the richest person in the cryptocurrency world with an estimated net worth of $27.4 billion, ranking 50th on Bloomberg 's billionaires list .

"I'm just a regular person, doing what needs to be done. That's all," CZ wrote in a 2018 blog post.

Changpeng Zhao was born in February 1977 in Jiangsu, then moved to Hefei (China), before moving to Vancouver (Canada) at the age of 12. There, he worked some part-time jobs, like two years at McDonald's earning $3 an hour.

After that, CZ studied computer science at McGill University in Montreal and worked for Bloomberg as a software developer in the trading department. He moved to Shanghai after leaving Bloomberg and founded the financial software company Fusion Systems. Knowing about Bitcoin while playing poker with friends in 2013, he immediately sold his house, invested a million dollars in this cryptocurrency, left Fusion to enter the crypto industry.

Before founding Binance in 2017, CZ went through four other crypto startups. Based on practical experiences, he built Binance - a platform that is both easy to use for novices and intuitive for experts. This method helped the exchange immediately succeed, attracting 120,000 people in the first 45 days of operation. Now the number has increased to 120 million users.

Founded in China, but when the country moved to tighten its grip on cryptocurrencies, CZ and co-founder Yi He immediately moved the company to jurisdictions like Japan and Malta. As Malta's regulations become stricter, Binance continues to "relocate", but in a more silent way.

The mysterious behavior of CZ and Binance

CZ still regularly writes blog posts, posts on Twitter and interacts with investors and fans. According to experts, CZ is knowledgeable about cryptocurrencies and cryptocurrency culture. This gives him credibility in the industry, even as he declines to disclose the corporate structure of Binance.

However, after leaving Malta, where Binance's headquarters is still a question mark, although the company has offices in Paris, Dubai, Abu Dhabi and many other places. In the US, Binance evaded the regulator with a separate office called Binance.US.

“Crypto has different rules in different places,” CZ told Fortune earlier in the year. "We don't want to bend the rules or even avoid them, we just want to find the vantage point."

CZ's whereabouts are also not mentioned. In April, he said he frequented two places, Paris and Dubai. However, the CEO of Binance almost did not appear in crowded places, especially after the FTX incident.

"CZ's great skill is not committing anywhere," commented Rohan Gray, a law professor at Willamette University. "But that's what you need to do when you're in a game that involves arbitrage."

In sight

Both CZ and Binance have mysterious movements. However, both are on the radar of the US government. In March, Hollen and Senators Elizabeth Warren and Roger Marshall signed a letter expressing concern about "Binance's role in evading regulators, transferring assets to criminals, hiding financial information, and hiding financial information." basic". Binance denies the allegations, but analysts say it is a clear sign that US lawmakers have been keeping an eye on the cryptocurrency exchange in the post-SBF era.

The shadowy gap between Binance and Binance.US is also part of what worries US regulators. According to documents and messages from 2018 to 2020 collected by the WSJ , the two, although they operate separately, are closely related.

CFTC Commissioner Christy Goldsmith Romero said similar patterns of circumvention persisted in the US in many other areas. However, the new crypto trading environment and the so-called "wild west", users may not have any asset protection.

CZ thinks everything is going against Binance . Earlier this year, he wrote on Twitter about four issues of concern in 2023, of which the fourth was "Ignoring FUD (creating fear, uncertainty and doubt), fake news, meetings attack". He emphasized that if he himself mentioned the number "four" in his later tweets, he was referring to that post. Although only half a year has passed, he has mentioned this number more than three times.

According to analyst Rohan Gray, although CZ and Binance dodge, their model is not much different from FTX. “CZ seems to be buying themselves some more time on the crypto front, but I don’t think their business model is better than FTX,” Gray said.

To date, the market share of Binance is still very large, accounting for two-thirds of all global cryptocurrency transactions. However, CZ recently started to take action to defend itself, having hired lawyers from law firm Latham & Watkins as its personal legal representative, as well as hiring hundreds of employees for Binance's legal department. .

Bao Lam (according to Rollingstone )

US investigates Binance again
Binance and CZ Sued
How does Binance find a way to 'dodge' the US?
CZ Denies Binance Like FTX 19
Binance 'hidden its China operations'