Changpeng Zhao does not like ambiguous words. Which is good: the crypto industry, in which he is a leading figure, is in crisis and cries out for clarity.
The 45-year-old founder and CEO of Binance, the world’s largest cryptocurrency exchange, meets the Observer in a luxury hotel in London after one of the most tumultuous weeks in the short history of digital money.
Binance was forced to suspend its bitcoin business on June 13 for a few hours. On the same day, a major cryptocurrency lender, Celsius, also stopped withdrawals. Then a large cryptocurrency hedge fund admitted that it was in trouble. Finally, last Saturday, in a symbolic moment, bitcoin fell below $20,000. The cornerstone of cryptocurrency has lost more than half its value this year, leaving professional and amateur investors suffering heavy losses.
Often known by the nickname CZ (see-zee), Zhao is dressed in the classic tech tycoon combination of a formal dark suit with a company T-shirt and sneakers. He says that he is traveling from country to country right now, meeting with “different government officials, regulators.”
Despite his soft-spoken manner, he is on a mission to convince. Sometimes the conversation turns to semantics, perhaps in response to the level of scrutiny he and his business are under. When asked if he still considers the recent crypto market moves to be “normal” as he described them this month, Zhao says, “Normal depends on how you look at it…everyone has a different definition of normal. … price fluctuations are normal.” ”
There is a similar focus on meaning when Zhao is asked about money laundering: “the word is very different in different countries”, although he says that Binance can “surely” do a “good enough job that regulators be happy.”
Last June, the Financial Conduct Authority ordered Binance to stop all regulated activities in Britain, saying it “could not be effectively supervised.” However, Zhao has not given up and says that he is looking for a license to operate.
Last week, Bloomberg conducted an interview with him that raised the possibility of a deep regulatory winter for his business. He responded by tweeting to his 6.5 million followers: “I will stop doing interviews with media outlets that do clickbait titles.”
He clearly has a deep interest in the media. Binance has announced plans for a $200m (£160m) investment in Forbes, the business publisher, as well as investing $500m in Elon Musk’s $44bn bid for Twitter.
Born in the coastal province of Jiangsu, north of Shanghai, Zhao followed his academic father to Canada when he was 12 years old. After graduating from Montreal’s McGill University with a bachelor’s degree in computer science, he worked on programming systems for the Tokyo Stock Exchange and Bloomberg. Zhao then moved to Shanghai in 2005, where he founded a high-frequency trading platform.
It was there that he became involved in a conversation about bitcoin during a poker game in 2013. Binance was founded four years later.
Years Four. Five
Family “I like to keep that private for security and privacy reasons.”
Education McGill University, Canada.
Last vacations Take vacations of one or two days a few times a year, but not long vacations.
The best advice you’ve ever been given “Internally, keep your head down and build. Externally, learn risk management. If everything went to zero, are you still okay?
Biggest career mistake Should have started Binance sooner.
Words that abuse “Who is responsible for this? Who?”
how do you relax Books, hanging out with friends.
TThe impact of recent events on Zhao’s fortunes has been precipitous, according to one source. The Bloomberg Billionaires Index estimates that his wealth, based on a 90% stake in Binance and his control of its related US stock exchange, has shrunk by more than $75 billion since January to $20.6 billion, since that the overall market has more than halved in the same period. period to around $900 billion.
Zhao laughs at that. “Actually, I have no idea how they come up with those numbers. You need to understand that net worth are just estimates,” she says. “When I look at my wallet, I don’t have that much. I don’t have anywhere close to any of those numbers.”
If you’re wondering how Zhao could find $20 billion in his wallet anyway, he’s referring to his crypto wallet: the account encrypted on a blockchain where digital money is stored. Although all blockchain activity is technically public, most big investors try to keep their wallets pseudonymous, and Zhao’s has not been publicly identified.
Binance makes money by connecting buyers with sellers, for a fee. It provides an exchange for a variety of currencies, from bitcoin to dogecoin and non-fungible tokens (NFTs). The company also offers to store those assets in a crypto wallet, and there is a range of financial products, including derivatives. It has 120 million customers worldwide and processes $1 trillion worth of trades per month, with Italy and France among the countries it can trade in, though customers can access it through the unregulated binance.com platform. abroad.
Last year, Zhao told the AP news agency that he only had bitcoin and his company’s own crypto asset, BNB.
One issue baffling regulators is the lack of clarity about Binance’s structure. The holding company is registered in the Cayman Islands, but the company describes itself as “decentralized” ownership, and its terms and conditions refer to an “ecosystem.” For example, its US exchange is separate from the main platform binance.com, whose operating base is not disclosed.
Some of the other questions about Binance are more serious. Reuters published a report in June alleging that he had served as a conduit for the laundering of at least $2.35 billion in illicit proceeds from hacks, investment fraud and illegal drug sales.
Zhao says he disputes the claims “very strongly,” adding that the public ledger provided by blockchains should have allowed Binance to track transactions. “We ask for a list of transactions, not just a list of names. They provided zero.”
Reuters said: “We respect our reporting on Binance, which has been consistent with the Trust Principles. [its in-house guidelines] of precision and absence of bias.
The conversation turns to those who have run out of savings by going the cryptocurrency route. “We have absolute sympathy for anyone who has lost money trading any market, including stock markets,” says Zhao. He says that financial education is key and mentions his company’s own Binance Academy.
He admits that there could be more failures in the crypto market. But he is unequivocal that there will be survivors. “There may be other failures. But cryptocurrencies will stay, bitcoin will stay, ethereum will stay, BNB will stay. That part is pretty safe.