CryptoPotato Profiles: Who is Changpeng Zhao, the Mastermind Behind Binance

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When we talk about crypto, many things come to mind—Bitcoin, Ethereum, Binance, blockchain, and whatnot. But those who’ve been following the industry for a while surely also think of Changpeng Zhao – one of the field’s most influential and, quite frankly, important figures.

And let me tell you this—his story is full of ups and downs, success and controversy.

We’re talking about a man who, at 15, was flipping burgers and pumping gas at a gas station and later created the largest crypto exchange in the world. He amassed a wealth estimated between $30 and $60B (although nobody really knows), went through some major legal issues with the US authorities, came out of it building an educational platform, and everything in between.

This is the story of Changpeng Zhao.

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Who Is Changpeng Zhao (CZ)?

Changpeng Zhao, often referred to as CZ, is the co-founder and former CEO of Binance, which he established in 2017. He established Binance with Yi He, a Chinese businesswoman and key figure in the cryptocurrency space.

Under CZ’s leadership, Binance became the largest cryptocurrency exchange globally.

Today, it continues to uphold that title, accruing between $5 and $15B in daily trading volume. The exchange once broke daily trading volume records by handling over $70B in 2022. This was a significant increase considering that in previous years, Binance’s peaks were $56B in 2021, $35B in 2020, and $15B in 2019.

Early Life, Family, Education

Born in China’s Jiangsu province in 1977, Zhao grew up in an intellectually stimulating environment, with both parents being educators. However, political challenges soon disrupted his family’s life. As a result, they emigrated to Vancouver, Canada, when Zhao was 12, seeking stability amid China’s changing political climate.

Adapting to a new country wasn’t easy for Zhao, who worked multiple jobs in his teenage years—including shifts at McDonald’s and a gas station—to support his family.

A turning point in Zhao’s life was when his father bought a 286 DOS computer, an investment that would prove to be a defining moment in his adulthood. During his years at McGill University in Montreal, Zhao, by age 16, was already diving into programming, which laid the groundwork for his future endeavors.

CZ majored in computer science. After university, he decided to embark on a career that combined his love for technology with finance: working for the Tokyo Stock Exchange. His role was essentially developing and contributing software that matched trade orders. This experience was one of CZ’s early steps into finance. Later on, he moved to New York to join Bloomberg Tradebook, where he spent four years developing futures trading software, giving him valuable insight into high-speed financial systems.

In 2005, Zhao got tired of being constantly promoted and managing teams across London, New York, and Tokyo. This is where he decided to build his first startup, Fusion Systems, in Shanghai, a company that built high-frequency trading platforms for brokers.

CZ’s Introduction to Bitcoin and His First Crypto Roles

If you’re old enough in the crypto space, you’re probably aware that CZ is an avid supporter of Bitcoin. Interestingly, he accumulated significant wealth through his involvement in BTC, with his net worth reaching an estimated between $40-$60B by September 2024.

But how CZ got into Bitcoin is way wilder than it sounds. To give an idea, if you think that selling or mortgaging your house to buy BTC is a funny, recurring joke in the crypto community, well, it wasn’t for CZ. This man embodied the meaning of degeneracy once he discovered Bitcoin.

CZ’s interest in crypto started in 2013 during a poker game with Bobby Lee —and no, I’m not referring to the comedian, but to the founder of BTCC, China’s first crypto exchange. Multiple sources claim Lee introduced CZ to Bitcoin and advised him to invest 10% of his capital into the cryptocurrency.

Imagine CZ’s reaction upon learning about Bitcoin and blockchain technology. He decided to sell his apartment in Shanghai and use the proceeds, plus his entire capital, to invest in Bitcoin, probably causing a few panic attacks in his family members. Now, that’s dedication.

It wasn’t just Bitcoin—CZ’s interest in blockchain led him to work on several crypto-related projects. He was Blockchain.com’s (formerly Blockchain.info) head of development, where he met several crypto advocates and founders.

He ultimately became OKCoin’s chief technology officer (CTO) in 2014 after Yi He convinced him to join the firm the same year she co-founded it.

OKCoin was once one of the largest crypto exchanges globally, but both CZ and He left in 2015 due to differences in opinions and values with the other founders and executives.

Two years later, CZ and He co-founded Binance. The rest is history, which will be explored in the Binance section.

History of Binance

Just eight months after its launch, Binance was already the world’s largest crypto exchange by trading volume. Talk about success. But what made it so unique compared to other established crypto firms?

Well, the exchange’s rise to prominence in the cryptocurrency industry can be attributed to several key factors, ranging from its technological innovation to strategic global expansion.

From the beginning, Binance prioritized advanced technology and a seamless user experience, and CZ applied his high-frequency trading expertise from his roles and experience in Fusion Systems to develop a platform capable of handling millions of transactions per second.

Binance also knows how to adapt to market changes, ensuring it stays relevant and competitive. Whether it was introducing new trading pairs, launching leveraged tokens, or entering the NFT space, the exchange’s quick response to emerging trends enabled it to capture market share across various crypto niches.

Expansive Product Ecosystem

Binance swiftly grew from a basic exchange to a comprehensive crypto platform. It introduced features such as spot trading, futures, options, and peer-to-peer trading, catering to diverse trading preferences, from the conservative and cautious investor to the risk-on traders wishing to trade memecoins with over 20x leverage.

Today, Binance offers so many services and products that it would be tiresome to name them all, but it goes from trading options, a knowledge center called Binance Academy, to a Launchpad, an incubator, which is part of Binance Labs, the exchange’s $7B venture arm firm (which Yi He successfully managed in one occasion), and the list goes on.

The launch of Binance Smart Chain (BNB Chain, although formerly called BSC) in 2020 expanded its reach into the DeFi space, allowing developers to create decentralized applications (dApps) of all kinds using a wide range of resources and dev tools.

This broad product offering established Binance as a versatile hub for all things crypto. Today, the BNB Chain is one of the largest crypto ecosystems with over $4B in total value locked (TVL). At its peak in April of 2021, BNB Chain had over $20B in cumulative deposits, but Ethereum still dominated with $70B in TVL.

Launch of Binance Coin

The introduction of Binance Coin (BNB) not only helped Binance attract more users but also offered a few key benefits for CZ and the team.

BNB was an instrument designed to raise funds and help the Binance ecosystem expand beyond trading. Launched through an Initial Coin Offering (ICO) in July 2017, which raised $15M to develop the Binance platform.

During the ICO, a total of 200M BNB tokens were issued, with the following allocation:

50% (100 million BNB) for public sale
40% (80 million BNB) for the Binance team
10% (20 million BNB) for angel investors

It’s a highly valuable utility token, not only for its high market liquidity but also because it gives traders who hold the coin a 25% discount on trading fees.

BNB, while not the first currency tied to a crypto exchange, offered some unique perks that other exchanges lacked, mostly due to BNB’s multi-faceted utility within the ecosystem. Moreover, BNB, which was originally an ERC-20 coin, came two years before the Binance Chain, was founded, which means BNB ultimately migrated to the BEP2 standard, which is still used today in the BNB Chain ecosystem.

According to CoinMarketCap, BNB is one of the largest cryptocurrencies today. It usually ranks fourth or fifth among the largest assets by market capitalization. It hit an all-time high of $720.6 in June 2024.

Each quarter, Binance allocates 20% of its profits to buy back and burn BNB, gradually reducing the supply. The aim is to reduce the total BNB supply from 200 million to 100 million. In April 2024, Binance completed its 27th quarterly burn, eliminating 1.94 million BNB, equivalent to $670.78M

CZ and FTX in 2022

Probably the biggest watershed moment in crypto history was the collapse of the disgraced FTX in November 2022.

FTX, founded by Sam Bankman-Fried (SBF) in 2017, quickly rose to prominence as a major cryptocurrency exchange. Its affiliated trading firm, Alameda Research —also founded by SBF and his ex-girlfriend, Caroline Ellison— was deeply connected to FTX, often using its native token, FTT, as collateral in its trading operations. This close relationship meant that both entities were heavily dependent on FTT, intertwining their financial health.

That doesn’t sound good at all, and it would be a shame if someone published an extensive report revealing the companies’ shady financial practices. Well, someone did.

On November 2nd, 2022, CoinDesk published a report revealing that a substantial portion of Alameda Research’s assets consisted of FTT tokens.

Naturally, alarms started ringing, raising concerns about the firm’s stability, as it indicated a reliance on an internal token rather than more secure assets, with Alameda holding a whopping $3.6B in unlocked FTT out of $14.6B in assets.

Post-Exit Risk Management

In a bid to save FTX, SBF approached Binance, leading to a non-binding agreement on November 8 for Binance to acquire FTX’s non-US operations. However, after conducting due diligence, Binance withdrew from the deal on November 9, citing concerns over FTX’s financial practices, which intensified FTX’s collapse.

Initially, CZ considered acquiring FTX, but those balance sheets would leave anyone baffled. Imagine discovering an $8B hole in your balances, and all this time, the founder has been using customers’ money to fund multiple avenues such as sponsoring political campaigns and whatnot.

One thing to note is that Binance and FTX’s relationship had evolved from cooperation to rivalry as FTX emerged as a strong competitor. Private communications revealed that Bankman-Fried had a low opinion of Zhao, referring to him in derogatory terms, indicating a growing hostility between the two.

So, CZ’s decision to liquidate FTT is open to multiple interpretations. It was either a protective move for Binance, or a strategic play against a growing rival, or both. There is not a particular consensus about this, but whatever it is, Binance’s public actions intensified fears and revealed vulnerabilities in FTX’s ecosystem, particularly regarding the reliance on tokens like FTT.

With its heavy reliance on FTT, Alameda Research suffered substantial losses. It also faced accusations of using FTX’s customer funds to offset its trading losses.

When CZ announced that Binance would liquidate its FTT holdings, SBF attempted to reassure that FTX had “more than enough” to cover creditors, while simultaneously suggesting that Binance’s actions were motivated by an effort to eliminate a competitor.

Legal Challenges and Criminal Charges

Zhao’s legal issues began with a series of investigations by US regulatory authorities that intensified in late 2022. He was implicated in failing to implement adequate anti-money laundering (AML) controls at Binance, leading to a prolonged investigation by the US Department of Justice (DOJ) and other regulatory bodies.

In November 2023, CZ pleaded guilty to money laundering violations, admitting that Binance had processed over 100,000 suspicious transactions connected to criminal activities, including links to terrorist organizations such as al-Qaeda and ISIS.

Zhao was residing in Dubai but had to stay in the US after the Judge denied permission to leave the country.

As part of his plea deal, Zhao agreed to step down as CEO and pay a personal fine of $50M. He was sentenced on April 30, 2024, to a four-month prison term—a date highly betted on prediction marketplace Polymarket—shorter than the three years initially sought by prosecutors due to his cooperation with law enforcement and positive character references.

Binance itself also faced legal challenges, agreeing to pay one of the largest fines in history: $4.3B to settle various investigations related to compliance and sanctions. Several services and products had to be suspended or discontinued completely.

Some of the consequences included:

Operational Restrictions: Binance now faces increased regulatory scrutiny worldwide, resulting in operational challenges and reduced willingness from financial institutions to engage with the exchange. This has led to compliance difficulties and limited market access.
Declining Investor Confidence: The legal issues have shaken investor trust, prompting many users to withdraw funds from Binance amid concerns about its stability and potential future legal repercussions. This exodus has triggered worries about Binance’s liquidity and operational efficiency.
Shift Toward Compliance: In response to these challenges, Binance has prioritized enhancing its compliance systems to meet regulatory requirements. This marks a significant departure from its previous rapid expansion approach, which often lacked stringent oversight.
Leadership Changes: With CZ stepping down, Binance has entered a new phase under the leadership of Richard Teng, who has taken over as CEO. Teng’s primary task is to guide Binance through ongoing legal hurdles while ensuring that it maintains operational integrity.

Following his release in September 2024, Zhao was barred from any involvement with Binance, in line with the terms of his plea agreement.

The Next Chapter for CZ

After all is said and done, how’s CZ’s future looking? Well, the entrepreneur said on X that he remains an avid investor but needs some time to chill out and reflect on his past decisions.

It seems that Giggle Academy is going well. This is probably CZ’s most important project to date, as it incorporates elements of gamification and adaptive learning through blockchain technology.

And Binance?

Well, while he’s barred from anything related to the company, he still has a massive influence as he has a 90% equity stake, which is quite a humorous, ironic, and satirical way of ending this chapter.

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