In recent days, Changpeng Zhao has taken every opportunity to advocate for regulation and scrutiny of the accounts of crypto companies – including his own, Binance.
This is the message the crypto billionaire proclaimed at a meeting at the G20 summit in Bali, on a podium in Abu Dhabi, in interviews. And above all on Twitter, where ‘CZ’ – as he calls himself – has more than 7.7 million followers and can be found for a large part of the day.
It is the flight forward of the most important man in the crypto world right now. According to market research company CryptoCompare, more than 47 percent of cryptos are traded worldwide via Binance, the trading platform that Zhao set up in Shanghai five years ago. Meanwhile, USD 76 billion worth of crypto coins are bought and sold every day via Binance. According to the company’s own statement, because that regulation and supervision of finances are still a thing of the future.
The fact that Zhao himself is now asking for this is due to the speed with which confidence in crypto entrepreneurs has disappeared in recent weeks and all the companies that are collapsing in the sector. Binance has been under a magnifying glass since the demise of trading platform FTX. In America, FTX, from founder Sam Bankman-Fried (30), was until recently the friendly face of crypto. The American elite son was a frequent visitor to Democratic politicians and presented himself as a modern philanthropist, who advocated regulation of the sector, among other things. He made his biggest competitor, Changpeng Zhao, born in China, in his forties, suspicious.
Now the roles are reversed. Bankman-Fried (@SBF) had to step down and his company is bankrupt. His customers worldwide have probably lost their money. In a desperate attempt to prevent the collapse of his company, he held out his hand to Zhao last week. He briefly considered a takeover, but after a short investigation of the books, he publicly concluded that there was no saving. This week, Zhao did announce a rescue fund for other ailing companies in the crypto industry, which are at risk of being swept away by the fall of FTX.
Zhao is everywhere, and nowhere
Zhao seems to be constantly present and approachable online. The difficult relationship between him and ‘SBF’ can be followed almost to the minute for Twitter users. ‘What. HAPPENED’ tweeted the former FTX CEO with one letter per tweet the day after he applied for a deferment of payment and lost control of his company. At about the same time, Zhao could be heard in a live audio session via Twitter, in which some 40,000 people worldwide joined to express their concerns about the safety of their assets and seek advice.
Zhao seems to be constantly present and approachable online. “I use Twitter more than I use the Binance app,” he says at a major tech conference in Lisbon in early November. He gets questions there about his investment in Twitter. He just helped Elon Musk, another big crypto adept, with $500 million to take over the company. He does this because of his belief in the importance of freedom of expression, Zhao explains.
For him, freedom of expression is related to the freedom of money, by which he means the crypto world, in which payments are made worldwide without the intervention of banks and other institutions. „Free speech comes before free money.”
That world has an uneasy relationship with authorities, which can be seen, among other things, in the frequency with which Binance and Zhao himself have moved. Two months after Binance was founded in Shanghai in July 2017, crypto trading platforms were banned in China. The company relocated to Tokyo. Shortly afterwards, when regulations were also tightened in Japan, Zhao moved Binance to Malta on paper. The holding company Binance Ltd. registered in the Cayman Islands. That is a paper shell, an address without an associated office or employees.
In the Netherlands, a Binance Nederland BV was established on October 7, 2021 in an office building in Amsterdam South. It is one of 66 companies with Binance in the name worldwide. Having a local entity is not an obligation for registration, but it was done to accommodate the regulator, explains Binance regional manager Roy van Krimpen. It covers the Benelux, Scandinavia, Greece and Cyprus.
Binance became the global market leader within a year of its inception and claims to have users in 180 countries. Regulators are chasing after it with regulations. The company is active in many more places than it has permission, which also applies to the Netherlands. In April this year, DNB fined Binance 3.3 million euros because it offers services on the Dutch market without the registration required since May 2020. According to DNB, the company has “a very large number of Dutch customers”.
Binance’s marketing is subtle. For example, on September 6, Zhao had an informal dinner in Amsterdam with a group of major Dutch ‘finfluencers’, who often talk about crypto coins on their channels, including Kwebbelkop (Jordi van den Bussche, 14.8 million subscribers on YouTube) and Crypto Michaël (Michaël van de Poppe, 165,000 subscribers on YouTube and 641,000 followers on Twitter). The next day he had an appointment with DNB for the registration procedure.
“They are like an eel in a bucket of snot,” says Simon Lelieveldt, a Dutch expert in financial supervision, who advises crypto companies that want a registration in the Netherlands, Binance. He says he refused Binance as a customer in October 2021 because they are cheaters. “They’ve gotten so big because they’ve never obeyed the law.” By this he means operating in markets without meeting the requirements.
The examples of this are numerous. Because not all services that Binance offers are allowed in America, a separate American branch was established with a more limited range of financial products. In practice, the vast majority of Americans simply remained customers of the parent company in the Cayman Islands and that was also the strategy, Reuters news agency revealed.
At the time of the move to Malta in early 2018, Zhao realized how superfluous offices actually are, he said in an interview with Prince Constantijn recorded at the beginning of October for his podcast The Scale Lab. Long before corona normalized remote working, Binance already allowed that ‘concept’ and everyone started working from home. Employees who still feel the need for a table with a computer on it can get a budget to rent something in a co-working space. Zhao himself recently moved from Singapore to Dubai, according to the American magazine Forbes, where he rarely seems to be.
In the podcast, Zhao quickly explains to Prince Constantine the various “concepts” he is dealing with. On the one hand, there are the “man-made national borders, which are enforced with police and military personnel.” And on the other hand, there is his company with about 7,000 employees around the world that runs 24 hours a day. “Some rules you have to abide by. To some maybe, but maybe not.” The concept of ‘company’, what is it actually, he wonders aloud. “The registration, a piece of paper? Or a headquarters, is that an office, or where the management is? You can separate that.”
Billionaire without an office
Zhao lives as what is called a ‘crypto nomad’, constantly on the move with no permanent office and (almost) without using a traditional bank account. His capital is – according to his own statement – for more than 99 percent in bitcoin and the ‘token’, or currency, that Binance itself issues, the BNB. “I still have a few hundred dollars here and there in ‘fiat’,” he nonchalantly replies to a question about this in Lisbon. ‘Fiat’ refers to traditional money, where a central bank is responsible for the backing.
Life without physical stability is easier for him than many others, he says in various interviews. This is because he has moved often. Zhao was born in 1977 (exact date unknown) in Jiangsu province in eastern China. His parents were teachers. When he was twelve, his family moved to Vancouver, Canada. There he had his first jobs as a teenager, at a gas station, McDonald’s and as a newspaper delivery boy. After studying computer science at McGill University in Montreal, he focused on software development for stock market trading and worked at stock exchanges in Tokyo and New York.
At the end of 2013, he bought his first cryptos on the advice of a friend, he tells his audience in Lisbon. That friend advised him – according to Binance’s website during a game of poker – to invest 10 percent of his assets in bitcoin. Instead, at the beginning of 2014 he went „all inclusive” and also sold his apartment a year later to buy bitcoins.
How many he bought is unknown. Zhao claims he has largely kept hold of the bitcoin he bought when the price was low. That would explain a significant portion of his net worth. Bitcoin could be purchased for a few hundred dollars around that time. The value fluctuates a lot, but has risen very strongly over several years (now around $ 16,000). So is the BNB, the self-published cryptocurrency that sold for 0.15 cents when Binance started and now costs around $270.
The magazine Forbes, which keeps lists of billionaires, currently estimates Zhao’s wealth at more than $ 17 billion. Bloomberg news agency made a calculation in early 2022 and came to $ 96 billion based on the company’s turnover, so without Zhao’s crypto assets.
Little is known about the Chinese-Canadian’s private life. According to Reuters news agency, citing anonymous sources, he has a son with Binance co-founder and co-owner Yi He. She is his confidant and right hand within the company, and is responsible for marketing, among other things.
Zhao does not flaunt his status as one of the richest people on earth. There are no images of a luxurious life circulating and he does not claim to grind property. In most photos he wears a polo or hoodie with the company logo, jeans and sneakers. The Binance logo is tattooed on the inside of his right arm. Meanwhile, he paints a boyish image of himself, as someone who likes to play poker and drink. He says he intends to give away a large part of his wealth. So far he seems to be investing it mainly in further growth of what he calls the ‘crypto ecosystem’.
Switch between worlds
Zhao is constantly switching between that ecosystem and the tangible world. At the tech conference in Lisbon, app developers try to get his attention in the hope that Zhao will help promote their application, or even invest in it. “CZ, when are we talking?” asks an entrepreneur who managed to get hold of the microphone during a question session with the audience. Afterwards, visitors throng the exhibition hall around him for selfies, which he patiently cooperates with.
Half an hour later at the subsequent press conference, he again mainly receives questions about the registration procedures in numerous countries. Binance recently received registration in France, Spain, Italy and Cyprus. The Dutch is still running. Zhao keeps it short. “We want to become the company with the most registrations in the world.” He talks about his visit to DNB in early October. He thinks the Dutch central bank is ‘progressive’, he says, because paper money is being phased out relatively quickly in the Netherlands. “I hope we can share good news soon.”
A version of this article also appeared in the newspaper of November 19, 2022