Changpeng Zhao: CTO In Eye Of Cryptocurrency Storm | Cryptocurrencies

Changpeng Zhao doesn’t like ambiguous words. What’s good: the cryptography industry, of which he is a figurehead, is in turmoil and calls for clarity.

The 45-year-old founder and CEO of Binance, the world’s largest cryptocurrency exchange, meets the Observer in a high-end London hotel after one of the most tumultuous weeks in the digital currency’s short history.

Binance was forced to suspend bitcoin activity on June 13 for a few hours. On the same day, a major crypto lender, Celsius, also suspended withdrawals. Then a major crypto hedge fund admitted it was in trouble. Finally, last Saturday, in a symbolic moment, bitcoin fell below $20,000. The crypto lifeblood has lost more than half of its value this year, leaving professional and amateur investors to suffer heavy losses.

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Often referred to by the nickname CZ (see-zee), Zhao is dressed in the classic tech-tycoon mix of a formal dark suit with a company t-shirt and sneakers. He says he is traveling from country to country at the moment, meeting “different government officials, regulators”.

Despite his soft voice, his mission is to convince. The conversation sometimes becomes dependent on semantics – perhaps a response to the level of scrutiny he and his company are under. When asked if he still views recent crypto market moves as “normal,” as he described them this month, Zhao replied, “Normal depends on how you see it… everyone has a different definition of normal… price fluctuations are normal. ”

There’s a similar emphasis on meaning when Zhao is asked about money laundering – “the word is very different in different countries” – although he says Binance can “surely” do a “pretty good job. so that the regulators are satisfied”.

Last June, the Financial Conduct Authority ordered Binance to halt all regulated activities in Britain, saying it was “not capable of being effectively supervised”. Zhao has not given up, however, and says he is seeking a license to operate.

Last week, Bloomberg did an interview with him that discussed the prospect of a deep regulatory winter for his company. He responded by tweeting to his 6.5 million followers: “I’m going to stop doing interviews with news outlets that do clickbait headlines.”

He clearly has a deep interest in the media. Binance has announced plans to invest $200m (£160m) in Forbes, the professional publisher, as well as investing $500m in Elon Musk’s $44bn bid on Twitter.

Born in the coastal province of Jiangsu, north of Shanghai, Zhao followed his university father to Canada when he was 12 years old. After earning a degree in computer science from McGill University in Montreal, 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 drawn into a conversation about bitcoin during a poker game in 2013. Binance was founded four years later.


resume

Age 45
Family “I like to keep this private for security and privacy reasons.”
Education McGill University, Canada.
Last holidays Takes one or two day vacations a few times a year, but not long vacations.
Best advice ever given “Internally, keep your head down and build. Externally, learn risk management. If everything is down to zero, are you still okay? »
Biggest Career Mistake I should have started Binance earlier.
Words he abuses “Who is responsible for this? Who?”
how he relaxes Books, hanging out with friends.


JThe impact of recent events on Zhao’s fortunes has been precipitous, a source said. The Bloomberg Billionaires Index estimates that its wealth – based on a 90% stake in Binance and its control of its related US exchange – has fallen more than $75 billion since January to $20.6 billion, the market said. in the broad sense having more than halved over the same period. period to around $900 billion.

Zhao laughs it off. “Actually, I have no idea how they arrive at those numbers. You have to understand that net worth are just estimates,” he says. “When I look at my portfolio, I don’t have that much. I don’t have anywhere near 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 crypto account on a blockchain where digital money is stored. Although all blockchain activity is technically public, most large investors try to keep their wallets under a pseudonym, and Zhao’s has not been publicly identified.

Binance makes money by connecting buyers with sellers for a fee. It provides exchange for a range of currencies, from bitcoin to dogecoin and non-fungible tokens (NFTs). The company also offers to store these assets in a crypto wallet, and there is a range of financial products, including derivatives. It has 120 million customers worldwide and processes $1 billion worth of transactions per month, with Italy and France being among the countries it is licensed to operate in, although customers can access them through the platform. unregulated offshore form binance.com.

Last year, Zhao told AP news agency that he only held bitcoin and his company’s own crypto-asset, BNB.

One issue that baffles 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 having “decentralized” ownership, with its terms and conditions referring 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 Binance questions are more serious. Reuters released a report in June that alleged it served as a conduit for laundering at least $2.35 billion in illicit funds from hacks, investment fraud and illegal drug sales.

Zhao says he “very strongly” disputes the claims, adding that the public record provided by the blockchains should have allowed Binance to trace the transactions. “We are asking for a list of transactions, not just a list of names. They provided zero.

Reuters said: “We stand by our reports on Binance, which have been consistent with the Trust Principles [its in-house guidelines] accuracy and freedom from bias.

The conversation shifts to those whose savings have been wiped out by the crypto rout. “We absolutely have sympathy for anyone who has lost money trading in any market, including stock markets,” Zhao says. He says financial literacy is essential and mentions his company’s own Binance Academy.

He admits there could be more failures in the crypto market. But it is unambiguous that there will be survivors. “There may be other failures. But crypto will stay, bitcoin will stay, ethereum will stay, BNB will stay. This part is quite certain.

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