Changpen Zhao does not like ambiguous words. Which is just as good: the crypto industry, in which he is a leading figure, is in turmoil and crying for clarity.
The 45-year-old founder and CEO of Binance, the world’s largest cryptocurrency exchange, is meeting with the Observer at a luxury hotel in London after one of the busiest weeks in the short history of digital money.
Binance was forced to suspend its bitcoin business on June 13 for several hours. On the same day, a large crypto lender, Celsius, also stopped withdrawals. Then a large crypto hedge fund admitted it was in trouble. Finally, last Saturday, at a symbolic moment, bitcoin fell below $ 20,000. The crypto cornerstone has lost more than half its value this year, leaving both professional and amateur investors to suffer heavy losses.
Often nicknamed CZ (see-zee), Zhao is dressed in the classic technological combination of a formal dark suit with a company T-shirt and sneakers. He says he is currently traveling on behalf of the state, meeting with “various government officials, regulators”.
Despite his soft manner, he is on a mission to convince. The conversation is sometimes hooked on semantics – perhaps a response to the level of control under which he and his business are subjected. Asked if he still considers the latest movements in the crypto market to be “normal”, as described this month, Zhao said: “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 Binance can “certainly” do “enough good work to keep regulators happy” .
Last June, the Financial Conduct Authority ordered Binance to suspend all regulated activities in the UK, saying it “cannot be effectively controlled”. However, Zhao has not given up and says he is seeking an operating license.
Last week, Bloomberg interviewed him, which raised the prospect of a deep regulatory winter for his business. He responded by tweeting to his 6.5 million followers: “I will stop doing interviews with news outlets that make headlines to click.”
There is obviously a deep interest in the media. Binance has announced plans to invest $ 200 million (£ 160 million) in Forbes, the business publisher, and to invest $ 500 million in Elon Musk’s $ 44 billion offer for Twitter.
Born in the coastal province of Jiangsu, north of Shanghai, Zhao followed his academic father in Canada when he was 12. After graduating from McGill University in Montreal with a 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 was involved in a bitcoin conversation during a game of poker in 2013. Binance was founded four years later.
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Age 45 Family “I like to keep this confidential for security and privacy reasons.” Education McGill University, Canada. Last vacation Takes one- or two-day breaks several times a year, but not long vacations. The best advice given to him is “Internally, keep your head down and build. Externally, learn risk management. If it all goes to zero, are you still okay? The biggest mistake of his career was to start Binance earlier. Words he uses excessively “Who is responsible for this? Who? ”How he releases Books, going out with friends.
According to one source, the impact of recent events on Zhao’s condition has been sharp. The Bloomberg Billionaires Index estimates that its wealth – based on a 90% stake in Binance and its control over the related US stock market – has fallen by more than $ 75 billion since January to $ 20.6 billion as the wider market decreased by more than half over the same period to about $ 900 billion.
Zhao laughs. “I don’t really know how they got to those numbers. You have to understand that the net worth is just estimates, ”he says. “When I look at my wallet, I don’t have that much. I have nowhere near any of these numbers. “
If you’re wondering how Zhao can find $ 20 billion in his wallet anyway, he’s referring to his crypto wallet – the encrypted blockchain account where digital money is stored. Although all blockchain activity is technically public, most large investors try to keep their portfolios aliases, and Zhao’s is not publicly identified.
Binance makes money by connecting buyers with sellers for a fee. It provides exchange for a number of currencies, from bitcoin to dogecoin and irreplaceable tokens (NFT). The company also offers to store these assets in a crypto wallet and has a number of financial products, including derivatives. It has 120 million customers worldwide and handles $ 1 trillion a month in transactions, with Italy and France among the countries allowed to operate, although customers have access to it through the unregulated offshore platform binance.com.
Last year, Zhao told the AP news agency that he held only bitcoin and his company’s crypto-asset, BNB.
One problem that puzzles regulators is the lack of clarity about the structure of Binance. The holding company is registered in the Cayman Islands, but the company describes itself as having “decentralized” ownership, with its terms relating to an “ecosystem”. For example, its stock exchange in the United States is separate from the main platform binance.com, whose operating base is not disclosed.
We have absolute sympathy for anyone who has lost money trading in every market, including the Changpeng Zhao stock markets.
Some of the other questions about Binance are more serious. Reuters published a report in June alleging that it had served as a channel to launder at least $ 2.35 billion in illegal hacking, investment fraud and drug trafficking.
Zhao says he disputes the allegations “very strongly”, adding that the public record provided by the blockchains should allow Binance to track the transactions. “We want a list of transactions, not just a list of names. They provided zero. “
Reuters said: “We maintain our Binance reporting, which is in line with the Principles of Confidence. [its in-house guidelines] of accuracy and freedom from bias. “
The conversation turns to those whose savings have been destroyed by crypto defeat. “We have absolute sympathy for anyone who has lost money trading in every market, including the stock markets,” Zhao said. He says financial literacy is key and mentions his company’s own Binance Academy.
He admits that there may be more failures in the crypto market. But he is unequivocal that there will be survivors. “There may be other failures. But crypto will remain, bitcoin will remain, ethereum will remain, BNB will remain. This part is quite safe. “
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