BINANCE; Binance (BNB) CEO who created Binance the world's largest cryptocurrency exchange

BINANCE; Binance (BNB) CEO who created Binance the world's largest cryptocurrency exchange

Changpeng Zhao created Binance the world's largest cryptocurrency exchange. It now faces an imminent regulatory collapse in the winter.

In the early months of this year, almost in some advanced circles, buying digital tokens named after dog memes is still a great way to participate in the bright future of financial and cryptocurrency exchanges. . Binance has introduced a new, less risky way to get into the fray. He encouraged his clients to invest in TerraUSD. Commercially known as "Stable Money," the brand is a cryptocurrency that behaves somewhat like a savings account and always promises to be $1. Binance told users who used their service to buy, sell and invest. Among the various cryptocurrencies, this particular stablecoin offered something special: a guarantee of nearly 20% of the annual return. Binance has shown users that TerraUSD can be a “safe” and “high-yield” alternative.

As crypto enthusiasts know, and as anyone familiar with traditional finance rules can guess, Terra was neither very safe nor very productive. Critics say the money was a Ponzi scheme that started and collapsed, causing bitcoin to plummet, as companies in the industry quickly laid off employees and stopped acquiring customers. Bitcoin is down nearly 70% from its November peak, and the industry is calling the cryptocurrency a winter.

In a frenzy, like Binance itself. On May 16, CEO Changpeng Zhao revealed the extent of the damage to the Binance website. The company's revenue was $1.6 billion, but now it's zero. Not that Xiao had listened or warned. "I have two things," he said in an interview that day. "I don't care about money."

It was hard to believe his words about a $14 orange juice in the French restaurant at the Four Seasons Hotel in Dubai because it was just money for a very wealthy businessman. Zhao is skinny with a shaven head, soft voice, and a wardrobe that seems to consist only of black Binance clothes. It's also something like encryption.

Depending on who you talk to, it could be a) a revolutionary system where a group of vertically integrated cryptocurrency giants - including Binance and similar competitors FTX - will take over not only national exchanges but the entire global financial system. . OR) You run the largest casino in the world without a license.

In January, Zhao - known as CZ among crypto experts - was among the 10 richest people in the world, at least on paper. Its value increased along with the price of bitcoin, falling from $96 billion to $11 billion, according to the Bloomberg Billionaires Index. However, Binance is still the largest crypto company by miles, handling more transactions than the next four exchanges combined. Over $50 billion is changed daily on the platform, which typically has a 0.1% fee. In practical terms, this means that Zhao, the company's largest shareholder, makes money whether its customers are buying or selling. "I was really surprised by the durability," he said, referring to Terra's downfall. “There is no bailout. There is no central bank. The market crash continued, but Zhao did not think there was much to see. According to him, the industry has developed.

Zhao moved to Dubai late last year. The desert city of the future — where foreigners outnumber locals by 9-1, tourists flock to 110 degrees Fahrenheit, and where the vast wealth created by oil-rich neighbors long ago overshadows any sense of place — a. It was the place for everyone. The one before him looked like a man from the countryside. Canadian-born who moved to Vancouver at the age of 12 and earned his computer science degree from McGill University in Montreal, Chow moved around the world throughout his childhood, rarely staying in one place for more than a few years.

In his twenties, he wrote a symbol for the Tokyo Stock Exchange. Then came a job at Bloomberg LP (magazine publisher) in New York. He then came to Shanghai, where he founded a company working on software for premium traders before founding Binance in 2017. However, the Chinese government banned cryptocurrencies.

She really feels at home in Dubai. He bought an apartment in the New Binance area, drove a taxi, moved to a house, and rented an office. The 45-year-old said he has more than a decade of experience with many crypto entrepreneurs and a close relationship with the UAE government. Cryptocurrency is a healthier investment than critics think, he said, and one company proving it is Binance. "We have a hundred and twenty million customers who trust us to save people's lives," he said. "We protect our consumers. We work with governments and regulators. You see we are trusted."

This is a bold statement. Money laundering, fraud, and extortion are part of the history of the industry, and even the most respected cryptocurrency companies can easily paint the charts with a bad look. But the rest of Binance's account is different. Today, the company is owned by nearly every major U.S. corporation. Financial institutions are being investigated around the world, including the Department of Justice, the Futures Trading Commission, the Internal Revenue Service, and the Securities and Exchange Commission. Binance is releasing these updates as part of an agreement to work with the government that can regulate cryptocurrency. But it’s not entirely clear that this is how management sees it.

According to court documents, company documents, and interviews with more than 40 current and former employees and business partners, the Binance platform has grown to offer illegal betting on small digital tokens, some of which are bitcoins. (Notably, Dogecoin was originally a joke and now has a market capitalization of 8 billion.) Binance later expanded to include financial instruments highly tied to the value of the currency. Although these products are illegal in many countries, this does not affect Binance, as they are not available anywhere. Analysts have long warned of the dangers of money transfers without hacking and money laundering. In June, Reuters reported that Binance was used to launder at least $2.35 billion, including money from the Black Web drug market, North Korean hacking groups, and fraudsters in general.

Participation in the cryptocurrency market refers to Binance

Binance said these were not true and that they had a security and research team of 120 people, including senior executives from the US, UK, and Europe. Before Zhao, Binance operated as an onshore exchange. It’s like the Cayman Islands of today or the Pirate Republic of the 19th century West Indies on the shores of an old dream. Either way — and Zhao likes the Cayman Islands analogy — they say those days are over. "The office, the head office, the parent company — at first we said no, and of course everyone was upset," she said. "This is where we built this year."

To find a solution years after breaking the law, Zhao follows the path of notorious criminals like Airbnb, Uber, and PayPal. He had been ignoring government demands for years. Then partner with the government to gain market share as you grow. But cryptocurrency exchanges are now tied to many of the world’s currencies, and regulators are ready to set an example of being the worst player in a major competition. Four of them have been removed and legal action will be taken against them. Or he could be the richest man in the world.

Although Binance has always presented itself as a private company, “business” is the right word for what Zhao does. By law, a company called Binance Holdings Limited is not allowed to operate this company in the Cayman Islands. their trademarks (such as the one drawn on Zhao’s right arm). The owner of the company is unknown. Zhao is the sole owner of Binance Capital Management and Crypto Inference registered in the British Virgin Islands.

Most transactions on Binance go through their flagship exchange Binance.com, which is based on who knows where and who manages it.

When merchants register for a Binance account, they agree to cooperate with a “Binance User Group”, which may change at any time according to the Terms of Use. "The Binance platform does not appear to belong to any other organization or legal entity," a lawyer for clients seeking payment after losing $1.2 million in one transaction told Bloomberg Businessweek.. in a letter obtained by an unexplained constant coin. The client backed out, but others seeking to sue Binance listed the names of the company and its executives.

Zhao said in an interview with Chinese media that he only used the word ‘company’ because of foreigners. When it comes to that, Binance is a "corporate". An employee is a "team member." However, Binance does not appear to have a traditional shareholder structure or board of directors. Zhao says he is a supporter of a leaderless organization implementing the immutable logic of blockchain, similar to crypto ideology. But in the case of Binance, former employees and investors say Zhao controls everything. In the end, the company is responsible,” said the former managing director, who, like everyone else in this article, asked not to be identified so as not to offend Zhao.

For most Binance investors, this doesn’t matter. Their shares are not listed on Zhao’s stock exchange. Binance apparently has no foreign shareholders, but it is in the form of a token known as BNB. Today, the coin trades for about $220 and has a total market value of $36 billion, but Binance began selling them for 15 cents each in 2017 as part of its ICO. this. “Blockchain knows no boundaries,” Binance said in an investor statement.

In the early days of the company, unlike regulated exchanges like Coinbase, anyone who wanted to trade on Binance had to first buy Bitcoin. Money from bank accounts can be moved to a regulated exchange before being sent to Binance. Alternatively, you can sell something in cryptocurrency (used cars, opioids) or buy cryptocurrency from an interested friend and exit the banking system. And... pay in cash. Binance.com allows anyone in the world to open an account with basic personal information and an email address. Users with unverified accounts can’t do much these days, but before the policy changes in 2021, they were able to withdraw 2 bitcoins (worth $120,000) per day. The company is lowering the cap to 0.06 Bitcoin, or about $1,200. A day at today’s exchange rate. “We were probably one of the first companies to grow simultaneously in 180 countries,” says Zhao. “There were users everywhere. We had groups everywhere."

But everywhere nowhere made sense. Zhao was a nomad who worked in hotels and rented out apartments and resorts around the world, communicating with employees via text, email, and video calls. But for years, ex-employees have said Binance had a secret base. Not only did this go against the company’s current idea, but it was wrong because it was in China, where crypto was verbose. So, as Beijing shut down its competing exchanges, more than 100 Binance employees reported to its offices in the Huangpu area of ​​Shanghai every day. There they lived at standard workstations with bilingual rule cards on their desks. They got a job under the name Luke Culture Development and applied for a business visa, and were asked to be careful not to reveal where they worked in public or when they wore company attire.

Then, in November 2019, I was instructed to pack up and leave. This includes computer cases, board games, and other small items. According to several people who were there at the time, other people had collected business cards and put them in the sink, making them unreadable. They are also assigned to coworking spaces around Shanghai or overseas like Zhao.

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Zhao did not object. In an interview with Dubai Four Seasons, I denied that there were no Shanghai fans. "Some officials go to work. - He is not even a manager, just an employee. Then he started criticizing the media. - As a reporter, you can't write two completely different stories, can you? she asked him. He continued with a pleasant conspiratorial smile. - You can say that the guy ran into the kitchen. or "He walks across the kitchen and looks at the sun."

He stopped curiously and looked around. We were in a completely empty room, watching the guards. The sun broke through the window again. "There are many events that do not completely match each other," he said.

The cryptocurrency industry has always been at a record high. As Bitcoin Booster has been pointing out for some time now, the public currency is based on shared beliefs and government regulations and is not so-called "fiat". The dollar, its value keeps at a certain level over time, and despite the use of the nominal value in the section of cryptocurrencies, cryptocurrency has grown on the general belief that the nominal value will increase. "Why? I don't know why. It could be a Ponzi scheme," said sports media entrepreneur Dave Portnow. When describing your investment points, say, "If you have a Ponzi, get on the ground floor."

Binance, the merchant that uses the exchange, calls it the "popcorn giant's casino." "Zhao is proud to admit that much of the appeal of cryptocurrencies is pure speculation," said the person, who disputed the accounts, fearing that Binance might retaliate. "It takes the best of the industry and makes it accessible." According to traders, Binance's message has always been "buy Dogecoin and get rich". Binance spokeswoman Jessica Yang says other cryptocurrencies are more reputable than Binance and companies use "rigorous systems" to verify their listings. After the collapse of Terra, Binance began testing how the currency would fare, he said.

However, Binance's use of PooCoin is an important feature in the company's early stages. Coinbase, American. is she. Cryptocurrency exchange, Binance offers 100 tokens. The market trades like a protein bar with a multi-level trading system, but only three Tokens. Everyone who invites Influence receives a discount in Marketing Currency. Top users competed for prizes like Binance Lamborghinis and Maseratis, and volunteers called Binance Angels promoted the company in Telegram chats and hosted a live fundraiser. Binance claims that angels work freely because of society's love for cryptocurrency, not because of a desire to get rich. "They are like priests," said He Yi, a former TV personality and crypto developer who is now the company's chief marketing officer.

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Although Binance said in its ICO that it would be a "pure cryptocurrency," Zhao seems to have very lofty aspirations from the start. A former commodity manager said in a 2017 interview that Binance was trying to influence not only cryptocurrency exchanges but also exchanges like Nasdaq. For this, it is necessary to provide customers who do not already have cryptocurrency. In other words, you deal with banks and systems. As Zhao told Dubai four times, "Early crypto adoption is also doing well overseas." "But some of them are regular users. They certainly want to change the way the justice system is developed."

Another cryptocurrency exchange, Coinbase, has made similar calculations, although it has implemented a policy that appears to be designed to lock in the United States. Binance.com will remain an unregulated exchange, but the company is looking to create a regulated exchange that will allow users to buy cryptocurrencies in dollars or other national currencies.

Binance met with the governments of Japan, Malta, and Singapore, all of whom ultimately blocked the move, and regulators elsewhere, including the Netherlands, South Africa, Thailand, and the Cayman Islands, warned that the change would be local. . . .

Former employees say the situation is even more confusing in the UK, where Binance has two competing operators – part of a fragmented business strategy that has intensified internal competition. The two companies have such a close relationship that the manager of the one says he only discovered the other when he was excited to hire someone he had never met. “The UK teams are working together,” said Binance’s Jang. It does not spread,” he said of the company’s plan. You have a purpose. "In June 2021, the UK Financial Services Authority announced that one of its subsidiaries. Binance Markets Limited Company was ordered to cease any "specified activities" and to display a notice on its website indicating that was given that it is not authorized to trade in its country.  Binance said, " can't check this properly."Binance has posted a notice on its UK website, but Binance.com is open to local traders because There is no official registration with the UK branch.

In 2019, Zhao launched Binance.US, which will be completely independent and will seek to comply with US regulations by limiting access to dangerous products. However, in 2020, Forbes reported that it had received a leaked article detailing a proposed “catch and replace” plan that strategy to steer Binance.us away from most market spikes will be. According to Binance, the proposal was misrepresented and sued for defamation, led by Charles Harder, who is known to have removed Gawker Media on behalf of attorney Peter Thiel.

Forbes stood behind his story, and Bines later dropped his shirt. Zhao said in Dubai that the article was not accurate, but that the controversy had no bearing on his decision to put $200 million into the magazine and would not interfere with the editorial work. What’s wrong with this article, he said, is that it’s unfair. Zhao has not been to the United States in years, which some see as an admission that he fears arrest. He didn’t say; He flees the country just to escape the conflict. “I thought I had full permission to enter the United States, no problem,” he said. "But we don't want to give the impression that we're trying to get users out there." When he speaks at conferences in the United States, he talks to Zoom.

Binance is currently the subject of an SEC investigation regarding the sale of unregistered securities during its 2017 ICO and a public offering. He also answered questions about the company’s relationship with global trade and US security. Todd White, the managing partner of Rulon & White Governance Strategies, a Washington-based lobbying firm that specializes in cryptocurrencies, believes the research shows Zhao is not taking the rules seriously. "They just practiced all over the world," White said. "I understand what you're trying to build, but anti-money laundering laws are necessary."

White said Binance executives at the 2018 meeting were strictly urged to comply but refused. "They are very angry," he said. “Amorphous is a strategic choice. You can’t sue the cloud.” Binance disputes that calculation, saying it takes a hard look.

Binance has tried to explain to regulators why one of the largest unregulated crypto exchanges isn't good enough. But Zhao is careful how he says it, "We don't educate them and change their opinion about it." It’s easier for us to change than it is for them.

Surprisingly, for a company built on Wall Street skepticism, Binance is more stable than the major financial markets. Today, an exchange, a brokerage firm, a bank, a brokerage firm, a data center, and a “shitcoin casino” at the same time. That's Nasdaq, Charles Schwab, Bank of America, Andreessen Horowitz, Morningstar, and Caesars Palace all combined. Lex Sokolin, an economist at blockchain firm Consensys Software Inc., said Zhao's crypto community is "vertically integrated so you would never allow a traditional financial institution."

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In short, Binance’s business model is full of potential benefits. Because of its size, for example, the value of money on your bank's list increases, and the Binance list has seen an increase in trading activity, some critics believe that people are trading. Binance spokesman Yung said employees follow a “strict code of conduct” that prohibits short-term trading. According to him, the company will fire people who violate the policy

The company is popular among cryptocurrency traders, but its history includes leaks, freezes, and at least one hack. Former SEC Internet Commissioner John Reid Stark said that while Binance and rival cryptocurrency exchanges are growing, they are still working to protect users from abuse of the law. "They operate without infrastructure, consumer protection, oversight. You and I are completely free," he said. "When it comes to money, you don't want it."

In Dubai, Zhao noted that many of Binance's criticisms could easily be applied to the company's competitors. Many cryptocurrency exchanges have criminal or security breaches while existing competitors face regulatory challenges. Sam Bankman-Fried, founder and opponent of Zhao FTX, used his wealth and media savvy to pay off Democratic politicians big time and get orthotics for Tom Brady, Gisele Bundchen, and Steph Curry, but FTX B got involved. Does the same where he lives (now in the Bahamas). Currently, Coinbase has acquired the book in with a conservative approach in recent years and now lists more than 100 tokens, including coins similar to dogecoin and Shiba in. Doge does it all. A real investment opportunity amid a cycle of meta jokes and excitement. The Coinsbase website includes, among other things, instructions explaining how to invest in the popcorn index, which they call "junk." (Binance has a similar leader.) Spam prices are down 99.96% since the last crash.

Zhao acknowledged some mistakes the company made and said it had changed direction last year. Previously, Binance tried to explain to regulators why large unregulated cryptocurrency exchanges are not a big deal. But Zhao understood in his own words: "We educate them, and we don't change their minds about it. It's easier for us to change than for them."

Zhao wanted to highlight this point in his influencer brand campaign. Forbes' investments in a proposed targeted takeover declined as investors warmed to the SPAC. However, Binance has invested tens of millions of dollars in some of the biggest soccer funds (including Argentina's national club and the top leagues in Italy and Brazil) and invested $500 million to support Elon Musk's bid to take over Twitter. Zhao said of Musk's permission, "We want to preserve our freedom of speech," but when asked how he decided to settle for a harsher, weeper song, Howie nodded. Freedom of speech is very difficult to define. "I never spoke to Charles Harder. Our team is the boss."

As part of the new platform for the elderly in Zhao's room, he appeared in the press. Experts advised him to check out his side job at BusinessWeek by visiting his favorite spots in his new hometown. But Zhao didn't seem interested in anything other than work, and Zhao's minicar, a black Toyota Granvia, was cut short in front of the hotel for just 10 minutes.

"People praise Rolls-Royce or Bentley, but no other car has such a low seat," Zhao said. "That's what I needed." Driving around it was clear that if there was anything they liked about Dubai, it was the air conditioning, not the indoor skiing or the futuristic architecture. It is difficult to travel with him.

Other indications turning to a standard Zhao might not be absolutely necessary. On the day of the interview, Zhao said reporters could visit his new office in Dubai. But after a flood of e-mails, calls, and apologetic texts from fans and PR consultants, a Binance representative confirmed that the office was closed due to an increase in COVID-19 cases. It was unusual. Zhao did not mention the diagnosis in interviews or at other companies. A day earlier, Binance conducted a separate interview with a Middle Eastern CEO who appears to be having a private meeting in a crowded hotel room.

Then you go through some blue doors. Inside is a large room with a beautiful view of the center of Dubai. There were bare concrete floors, bare, dry channels, and so on. It was an unusual delay. “There's no one here,” he said. Another plot. "Yes Yes".

Meanwhile, Zhao and the rest of the Binance management team are back on track. The day after the interview, he flew to France to attend the Cannes Film Festival (Binance hosted a pick lottery during the event), then moved to Paris for the summer. It has been successful in Europe, where Binance Italia recently received regulatory approval from Binance France. Zhao recently discussed the possibility of making Paris a new base.

The following month, Zhao tweeted that Binance would hire 2,000 jobs, unlike other crypto companies that laid off workers due to the economic downturn. He tweeted a picture of himself holding his legendary salary in a crowded office. This is interesting, although not entirely fair. The office is similar to the office on the free photography site Shutterstock. Zhao's head is photoshopped onto the model's body. Binance's Yang said the tweet was "part of a meta-joke" because Zhao created several of his own Shiba Inu. The tweet got over 50,000 likes.