Binance founder Changpeng ‘CZ’ Zhao wants to ‘rebuild’ cryptocurrency after FTX crash


Hong Kong
CNN business

Binance founder and CEO Changpeng Zhao is once again in the global spotlight, this time as the self-proclaimed white knight of cryptocurrencies as the industry is embroiled in crisis.

The Canadian billionaire made headlines this week for offering to come to the aid of entrepreneurs facing a cash crunch in an effort to help “rebuild” the sector.

Zhao, who goes by “CZ,” made the offer just days after canceling a bid to help save one of the largest companies in the industry, FTX. The company went bankrupt two days later.

Zhao announced on Monday that to mitigate any further damage caused by the FTX crash, his team would set up “an industry recovery fund to help otherwise strong but cash-strapped projects.”

Binance, the world’s largest cryptocurrency exchange, would welcome other industry players who would like to participate as cash investors, it said. She said on Twitter.

“Crypto won’t go away. We are still here,” Zhao added. “Let’s rebuild.”

Zhao launched Binance in July 2017 in China, gradually building it into the world’s largest cryptocurrency exchange.

In September of that year, most of its employees fled the country after the Chinese government issued a notice banning cryptocurrency exchanges, according to a company blog. Zhao said it was “before Binance could be properly established” or incorporated in the country.

Four years later, in September 2021, Chinese authorities outlawed all cryptocurrency-related business activities and vowed to crack down on illicit activities involving digital currencies.

According to company blog posts, Zhao was born in China, lived in the central province of Anhui, and at the age of 12, emigrated to Canada with his mother in 1989. He described waiting three days outside the ‘Canadian Embassy for a visa, taking turns at night with his family to keep their post in line.

Zhao spent her teenage years in Vancouver and previously worked at McDonald’s to help support her family.

After studying computer science at McGill University, he worked on trading software for the Tokyo Stock Exchange and Bloomberg.

“He then learned about bitcoin in 2013 while playing poker, after which he decided to go all-in on cryptocurrencies and dedicate his life to it,” according to Binance. “She even sold his apartment to him to buy bitcoin.”

The road to success has not been easy.

Like other exchanges, Binance has faced significant regulatory hurdles around the world in recent years, including a ban in the UK and other restrictions in countries like Canada.

The company is also on an investor alert list in Singapore, where the Central bank warned that it is not locally licensed or regulated.

Last week, Zhao addressed speculation about the state of the company in the city, writing on Twitter that Binance “has not been banned, but still unlicensed.”

Zhao spoke about some of the company’s challenges, saying that as a Chinese-born business leader he faced undue suspicion.

“The bottom line is that because we have ethnic Chinese employees, and perhaps because I am ethnic Chinese, we are secretly in the pockets of the Chinese government. We are an easy target for special interests, the media and even politicians who hate our industry,” she wrote in a recent blog post.

“I’m a Canadian citizen, period.”

As of September, Binance had branches in countries including Spain, Italy, France, Bahrain and the United Arab Emirates, Zhao added.

Zhao was catapulted to mainstream attention earlier this year when he became one of the richest people on Earth.

In January, his estimated net worth reached at least $96 billion, placing him within the ranks of leaders such as Oracle (ORCL) founder Larry Ellison and surpassing that of Mukesh Ambani, the Indian tycoon.

His projected fortune has since dropped to $16.9 billion as the value of cryptocurrencies plummeted, according to calculations from the Bloomberg Billionaires Index.

A Binance spokesperson previously told CNN Business that “CZ intends to donate most of its wealth, even 99% of its wealth, just like other entrepreneurs and founders.”

Zhao was under pressure to step in as one of the last titans standing in the worst turmoil in the industry.

The industry is currently in the midst of a so-called “crypto winter”, which was triggered by the crash of TerraUSD, an algorithmic stablecoin, which is a type of cryptocurrency that was supposed to be pegged one-to-one with the US dollar.

In May, TerraUSD lost its peg to the dollar, which led to the crash of its sister token and ultimately created a huge global liquidity crisis in the cryptocurrency sector.

Last week, he offered a lifeline to Sam Bankman-Fried, a 30-year-old rival who ran FTX, one of the best players in the business.

The Binance boss said his company was asked for help as FTX grappled with liquidity issues. In response, Binance announced that it would buy its smaller rival.

But in a dizzying turn of events, Binance almost immediately pulled out, saying that after reviewing FTX’s finances it had concluded the company’s problems were “beyond our control or ability to help.”

The deal quickly fell apart, paving the way for FTX to file for bankruptcy and Bankman-Fried to resign.

The news marked a stunning fall from grace for one of the industry’s most revered entrepreneurs, who himself was being touted as a savior of cryptocurrencies after working to keep several industry players afloat in a series of similar deals this year. .

After the interruption of the purchase, Zhao was candid about the remaining challenges of the industry.

Speaking in Indonesia on Friday, he urged regulators to look beyond anti-money laundering rules and know your customers, to instead focus on the operations, business models and reserves of exchanges like FTX.

He said comparing the current crypto chaos to the 2008 global financial crisis was “probably an accurate analogy.”

“It is devastating for the industry. A lot of consumer confidence is shaken,” Zhao added. “We have been set back a few years.”

In separate remarks in Indonesia on Monday, Zhao doubled down on his call for more regulation.

There is a “lot of risk,” he said. “We’ve seen in the last week that things have gone crazy in the industry, so we need some regulations, we need to get it right.”

— Matt Egan of CNN contributed to this report.

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