The largest cryptocurrency exchange in the world can trace its origins to a dimly lit hot pot restaurant on the southern edge of Chengdu. It was June 2017, and Chandler Guo, an early Chinese cryptocurrency mogul who made his fortune mining Bitcoin, was hosting a wedding anniversary party for his wife. Guo remembers it as a raucous event — beer was flowing, and guests spilled out onto the sidewalk, where the restaurant had to set up extra tables and chairs. “All the big people in the Chinese crypto world” were there, he says.
The crypto market was feverishly hot at the time — Bitcoin reached a record price of nearly $20,000 in 2017 — and at the party, after numerous toasts and bowls of the spicy Sichuan speciality, talk turned to ‘Initial Coin Offerings’ (ICOs), the crypto equivalent of an IPO, in which a company sells a new coin as a way to raise funds.
One of Guo’s guests was a slender man named Zhao Changpeng, more commonly known as CZ, who had traveled from Shanghai for the party and showed up wearing an off-white polo shirt, rimless glasses and a black backpack. CZ had been working in the crypto industry since 2013 and had previously shown interest in launching his own coin and starting his own exchange, but, in Guo’s telling, CZ’s timing hadn’t been right; it had been a bear market when he had flirted with the idea before. At the end of the party, Guo remembers CZ coming up to him and asking, “‘Is this a good time?’ And I said, ‘This is a good time.’”
CZ describes the party as the “final tipping point.” As he tells The Wire, “That night, after dinner, I told our team, we will do it.”
In the week that followed, CZ put together a “white paper” for Binance, a cryptocurrency exchange that would list its own coin, “BNB,” while also allowing users to buy, sell and trade a variety of other coins. Today, only five years after it was founded, Binance processes $76 billion in trading volume every day, and according to TheBlock, a crypto information platform, Binance makes up 65 percent of total crypto-to-crypto trading market share. Forbes recently estimated Binance’s market valuation at $92.5 billion, which would make it by far the most valuable crypto exchange.
“All of us were kind of losers,” says Guo, who was a beef merchant before he started mining Bitcoin. “If you ask me, is CZ special? No, he is not. A lot of people work harder than him. But he is lucky.”
Indeed, Guo says 20 of his guests decided to start cryptocurrency ventures that evening to capitalize on China’s crypto boom, but CZ had something the others did not: Canadian citizenship. Born in China’s Jiangsu Province, he moved to Canada at the age of 12 and attended high school and college there, before moving to New York, Tokyo and Shanghai.
At the time of the hot pot party, the regulatory environment around crypto was murky — rumors were already swirling that China was going to ban ICOs. But of the many new crypto ventures that came out of the evening, CZ’s was the only one not contained by nationality. “Blockchains have no borders,” Binance’s white paper explained. “Most exchanges focus only on one language or one country. Our international multilingual team has extensive working experience in North America, Europe and Asia, and we are able to smoothly support the global market.”
Just two months later, Binance proved its point. Guo says in the weeks following the party, he called the CEOs of OKCoin and Huobi, the two largest exchanges in China at the time, and they both told him that they were under exit bans. Scared at the prospect of also getting stuck, Guo says he made plans to leave China, and told CZ to do the same.
In September, the same month China banned ICOs, CZ heeded the advice and flew to Japan, taking Binance with him. Unlike many other exchanges at the time, Binance didn’t trade in fiat, which meant it didn’t have any relationships with Chinese banks and was easily able to move out of the country. Its business existed almost entirely on servers.
“I believe having the experience of living in different parts of the world helped in some subtle ways to make Binance the global platform it is today,” says CZ, who wrote answers to The Wire’s questions from Dubai.
If you ask me, is CZ special? No, he is not. A lot of people work harder than him. But he is lucky.
Chandler Guo, an early Chinese cryptocurrency businessman and friend of CZ
Binance has yet to settle down in any one place. The platform is, essentially, everywhere and nowhere: It employs more than 5,000 people and has more than 90 million registered users — all without an official headquarters. The company even claims that because it was “launched as a decentralized organization,” it is inaccurate to say it was founded in Shanghai, though its initial operations were located there. Today, the company has a holding company registered in the Cayman Islands. Binance declined to comment on whether that is the ultimate parent company.
CZ is similarly difficult to box in. His Twitter feed reads like a travel blog. Last month, he posted a video seemingly filmed from a car window, with a Spanish flag emoji and the caption, “the 43rd country I have been in.” A few days later, he tweeted, “If you’ve never done it, move to a different country for a while. Experience the world. It will broaden your horizon, view of the world, and increase your value.”
Globetrotting has certainly increased CZ’s value. Although it is unclear what percentage of Binance CZ owns, estimates of his net worth range from $65 billion to $225 billion — the upper limit of which would make him the second richest man on earth, behind Elon Musk.
But while the 44-year-old says he feels at home anywhere in the world, critics say his galavanting equates to “jurisdiction hopping” right as authorities are trying to pin crypto ventures down. According to reporting from Bloomberg and The Wall Street Journal, four separate U.S. federal agencies have launched investigations into Binance while regulators in Europe and Asia have raised concerns about Binance’s business practices. Without a headquarters, experts say the regulatory framework that Binance falls under remains unclear, as does the location of the company’s assets for tax purposes and lawsuits.
“He doesn’t seek government or legal accreditation. He does not seek to be regulated. He seeks loopholes,” says Leonhard Weese, the co-founder of the Hong Kong Bitcoin Association. “People find this admirable and in the spirit of crypto anarchy.”
But within the crypto world, even as many hail CZ for building a financial powerhouse in the span of five years, others have criticized his strategy. Investors in the platform have complained about broken agreements, and the combination of the highly volatile crypto market plus weak consumer protections have left a wake of jilted users and lawsuits.
Amid increasing pressures and criticisms, Binance recently announced it would establish regional hubs in France and Dubai, both of which granted the company crypto licenses. “What we have come to realize is that regulators ask, ‘where are you based,’” a Binance spokesperson tells The Wire. “There is absolutely a need to inform regulators where we are located.” The spokesperson said there is more detail to come on the company’s legal structure and that there might be more regional hubs down the line, but the company likely won’t have a traditional global headquarters like Google or Apple.
Critics say it’s simply a stalling tactic. “Calling something a ‘hub’ means nothing from a legal standpoint,” says Lee Reiners, the director of Duke University’s Global Financial Markets Center and a former official at the Federal Reserve Bank of New York. “A headquarters is the home base of a business, the address where it’s legally registered.”
Over the last five years, CZ has made similar nods to regulatory concerns — hinting, for instance, that the company would set up shop in Japan, Singapore and Malta — and always ended up moving on. It seems his success, from day one, has been linked to his ability to dodge customary corporate structures. With a sharp business acumen, and a personality often described as “determined” by those who know him, he has risen to the top of an industry with few rules and seemingly endless money to be made. But with regulators across the world finally chasing after the once-fringe sector, the question is, can CZ run forever?
‘I DON’T WANT TO MISS THIS’
CZ thinks of himself as someone who has always been ahead of the curve. The son of a professor and a high school teacher, CZ started elementary school two years early. “I was the smallest kid in my class,” he says. “But somehow, I kept up.”
When he was 10, CZ’s family moved from a rural town around 300 miles north of Shanghai to Hefei, where both his parents got jobs at the University of Science and Technology of China. Since the family lived on campus, CZ spent his days in the dormitories, tagging along with college students, who taught him how to play Go and Chess.
A few years later, when the family moved to Vancouver so that his father could study at the University of British Columbia, CZ started picking up jobs — as a paper delivery boy, at a McDonalds flipping burgers, at a gas station on the red-eye shift, and as a volleyball referee. “As new immigrants in Canada, both of my parents had low wages… [and] worked long hours,” he says. “I had a lot of time and freedom to myself. But I didn’t have money. There were no allowances. So I started work early.”
He even got into computer programming young, thanks to a gift from his father. A year after he arrived in Canada, CZ says his father took him to a computer store and spent $7,000 (CAD) on an IBM computer. “That must have been a huge chunk of the family savings, as it was equivalent to multiple months of his salary at the time,” says CZ. But the exposure to games, programming languages and, later, the internet was worth it. “Looking back, I am not sure I would be where I am today if that computer didn’t exist at that time,” CZ tells The Wire.
CZ went on to study computer science at McGill University. After graduation, he landed a job at a company developing trading systems for the Tokyo Stock Exchange, and later parlayed that experience into a job with Bloomberg’s futures trading platform in New York. He stayed there for four years, before moving to Shanghai in 2005, where he co-founded Fusion Systems, an exchange connectivity firm, with former colleagues from the Tokyo firm.
In Shanghai, CZ hosted a weekly poker game for business people and entrepreneurs. Vaughan Marks, one of the Fusion co-founders, says CZ is known to go all in on his hobbies — he remembers CZ going through video game, golfing and photography phases — and his approach to the poker games was no less fervid: CZ rented out a separate apartment for the games and hired professional dealers.
Marks says that, originally, the buy-in for the game was around $15 dollars, but gradually it increased to the point where people were betting more than their monthly salaries. “It got a little out of hand,” he says. “But Changpeng did better when the stakes got higher. He wasn’t afraid to gamble.”
The poker games were where CZ’s path first crossed with the then-tiny crypto industry. Bobby Lee, who founded the first bitcoin exchange in China, BTCChina, regularly attended the games, and one night in 2013, Lee told the group that they should invest in Bitcoin.
Lee tells The Wire that he doesn’t recall CZ’s reaction, but that “the typical reaction was dismissive at that time. Bitcoin didn’t have the glamor it does now. It was practically impossible for people to research and buy Bitcoin.”
CZ, however, quickly became obsessed with what he saw as the next big thing. He read the Bitcoin white paper and tried to convince Fusion to enter the crypto currency space. In a 2013 email about bitcoin, which was reviewed by The Wire, with the subject line “business idea” from CZ to other Fusion executives, he wrote, “This is as big, if not bigger, than internet 15 years ago. Only this time, because there is internet, information spreads much faster, and this is all happening at lightning speed. I don’t want to miss this. The next opportunity this big will happen 20 years later, I will be too old by then.”
But the Fusion team was not as enthused by crypto as he was. According to Marks, CZ thought they “couldn’t see the future,” and they decided to part ways. CZ sold his apartment in Shanghai for Bitcoin — a bold move at the time — and in late 2013, he traveled to Las Vegas for a crypto summit, where he found that he enjoyed the crypto culture. “I found that this group of young people was very sincere and worked very hard,” CZ says. “At that time, a person transferred some coins worth $300 to me in order to teach me how to use the wallet. And he refused me to transfer it back and asked me to keep it to teach the next person.”1That person, apparently, was Vitalik Buterin, the founder of Ethereum, according to this interview with Zhao from The New York Times.
CZ started working at Blockchain.com, which was co-founded and funded by Roger Ver, an early crypto booster. Despite getting along well with Ver — who says “CZ is really level-headed and calm and deliberate and focused and just a real easy guy to get along with in all of my interactions with him” — CZ only stayed at Blockchain.com for a year before taking on the role of CTO for OKCoin, a prominent Chinese exchange. Again, he didn’t stay long. A few months later, CZ and Star Xu, the company’s CEO, had a very public showdown. In an online post, OKCoin accused CZ of exaggerating his technical expertise, signing a contract without Xu’s consent, and engaging in “deceitful tactics.”
CZ decided to strike out on his own. In 2015, he founded Bijie Technology in Shanghai, which built back-end trading software for exchanges. Less than two years later, he attended the fateful hot pot party and decided to launch an ICO for BNB, Binance’s cryptocurrency, and establish Binance. The original executive team at Binance consisted of former Bijie employees, according to the Binance white paper, and they started using the tools they were previously selling to other exchanges for their own operation.
Binance was founded on two simple ideas: that it would never trade fiat (meaning that it wouldn’t have to maintain relationships with banks — a strategy it has since changed), and that it would list many different coins, not just the famous ones like Bitcoin.
“They hit the ground running by listing so many tokens so quickly. They were really a marketplace,” says Jehan Chu, the founder of Kenetic Capital, a Hong Kong-based blockchain venture capital firm. “He laid out a vision that was unique at the time.”
Chu says he passed on investing in Binance in early fundraising rounds because he thought the valuation was too high. While he says this was “a big miss,” not all of Binance’s early investors have been pleased. Fundraising for cryptocurrency companies is not exactly like traditional stock IPOs. Some early investors were given BNB, Binance’s currency, which has appreciated more than 8,000 percent since 2017, and some were given equity in Binance itself, which isn’t always a straightforward deal.
Despite Binance’s large valuation from sources like Forbes, there is still a lack of clarity on how, exactly, to value a crypto exchange, which makes payouts to investors contentious. For example, Chen Weixing, the founder of Chinese rideshare company Kuaidi Dache reportedly bought 5 percent of Binance shares in 2017, according to Chinese media reporting in 2020, but Binance only agreed to buy back the shares at around a $600 million valuation. (For comparison, Coinbase, the far smaller U.S. exchange, had already been valued at $8 billion at that point.) Binance declined to comment on Chen’s allegations, and Chen did not respond to requests for comment.
Sequoia Capital China also took legal action against CZ after trying to negotiate an investment agreement that would have given the venture capital firm an 11 percent stake in Binance. The negotiations dragged on for months, and eventually CZ pulled out to pursue other investment firms, which Sequoia alleged broke their exclusivity agreement. The case was later ruled invalid by a Hong Kong court, and CZ ended up suing Sequoia for damages.
Marks says that while he doesn’t know the details of the Sequoia case, he sees it as aligning with CZ’s broader philosophical leanings. “He didn’t like the system. He didn’t like VCs making huge amounts of money on the backs of hard-working entrepreneurs. Maybe he had a chip on the shoulder,” Marks says. “Part of the attraction of Bitcoin was ‘stick it to the man.’ It was something he could do that could buck the system.”
CZ’s approach to corporate governance can also be seen as part of his effort to “buck the system.” As he told Chinese media in 2021, “We basically never use the word ‘company’ internally… We use the term ‘organization’ internally. We generally don’t use the word ‘employee,’ and call it ‘team member.’”
They hit the ground running by listing so many tokens so quickly. They were really a marketplace. [CZ] laid out a vision that was unique at the time.
Jehan Chu, founder of the blockchain VC Firm Kenetic Capital, on the early stages of Binance
The company confirmed to The Wire that CZ holds a majority stake in Binance, but declined to state a specific percentage. CZ himself often downplays his wealth. For instance, after Fortune put CZ on its cover with the headline “The $74 Billion Man,” he tweeted, “Really not that rich, but honored to be featured on the cover.”
Without a formal headquarters, Binance ‘team members’ are scattered across the world. Although Binance no longer legally operates in China – and the company is quick to distance itself from its origins in China – the company confirmed that it still has employees there.
The company even had an ambiguous corporate structure back in its early days in China. An individual named Chen Guangying, for example, comes up again and again in corporate records tied to a network of companies affiliated with CZ. A company Binance founded in 2017 in China, which was closed in 2018, was 80 percent owned by Chen, according to data from WireScreen.2WireScreen is the data arm of The Wire Bijie Technology, for example, is 93 percent owned by Chen. (A Binance spokesperson says that she owns such a large stake in Bijie because other shareholders exited as the company winded down.) And even an investment company CZ was involved in running, which was started in 2012, listed Chen as the supervisor, according to WireScreen.
In February, Chen’s name emerged again when The Wall Street Journal reported an SEC probe into possible improper linkages between Binance’s U.S. subsidiary and two trading firms on the exchange. The trading firms are ‘market makers,’ meaning that they continually buy and sell on the platform and smooth out price fluctuations, raising questions about whether the firms received preferential treatment. One of those companies, Sigma Chain AG, lists Chen as the president of the board, according to corporate records reviewed by The Wire.
Chen does not show up on any publicly available Binance materials, but the company confirmed to The Wire that Chen still works for Binance, and also worked at Bijie. Describing her role as primarily administrative, a Binance spokesperson says that Chen is now a European citizen who splits her time between Dubai and Europe, and that she “is a private person, and is not a public figure.”
Weese, at the Hong Kong Bitcoin Association, notes that within the crypto world, “She is a bit of a mystery.”
Chen’s LinkedIn page, which Binance confirmed belongs to her, says she is a “co-founder,” without listing a company. When asked if Binance considers her a co-founder, the spokesperson said, “She is part of the founding team, does that make her a co-founder? I don’t know.”
A Binance spokesperson says that Chen met CZ while “she was working for another startup whose founder is a friend of CZ’s,” but declined to comment further on her biography.
THE CRYPTO RECKONING
It was a normal Wednesday in May last year, when Fawaz Ahmed, a full time cryptocurrency trader in Toronto, lost $13 million. After noticing that Ethereum prices were dropping rapidly, Ahmed tried to sell his position, but the Binance app on his phone didn’t allow him to click anything. As he watched the prices slide further, he pulled out his computer and tried to sell there, with no luck. In the span of a few hours, he lost 3,300 Ethereum coins. “I watched my position get liquidated in front of me,” he says.
Later, he found out he was not the only one: there was a large outage on the Binance platform, leaving many users unable to sell their crypto assets. Initially, he assumed the company would compensate them for their losses, but after some back and forth, he says the company only offered to pay him back $20,000.
Now, Ahmed, along with hundreds of others who lost money in the outage, are filing a class action lawsuit. Binance’s user agreement requires arbitration to be filed at the Hong Kong International Arbitration Center (though that is not where the company is headquartered), which usually costs around $60,000 per case. The group of traders secured financing from a private equity firm specializing in crypto litigation funding and hired White & Case, a prominent U.S.-base law firm, to represent them. Binance declined to comment on the case.
Ahmed says the incident not only hurt his financial situation, it also impacted his mental health. He is still a crypto trader, but he never trades on Binance anymore and always manages his positions in case of outages. After the case is over, he says he hopes he can take a break from trading.
“Before this happened, I thought he [CZ] was an amazing entrepreneur,” says Ahmed. “But this is people’s money they are putting in. These guys are making billions of dollars, they should act like it. They should be responsible.”
Aija Lejniece, a lawyer who is working with users who lost money during the Binance freeze, says that while crypto emerged as a movement against the financial establishment, many crypto companies have grown to rival traditional banks and companies in size — while lacking any of the consumer protections.
“There is going to be some type of internal reckoning in crypto,” she says. “The reality is that you end up with the same type of environment you had in the beginning. What is the difference between Binance and a big bank?”
Right now, she adds, “It is a bit like the last days of the Roman Empire. Everyone is drinking and enjoying themselves and not worrying about what the future is.”
Todd White, a DC-based lobbyist who founded a crypto focused Super PAC to elect crypto friendly lawmakers, says he saw this attitude firsthand. In 2018, as Binance was first considering opening a U.S. branch to appease regulators, White met with Wei Zhou, Binance’s then-CFO, in Washington, D.C., to discuss navigating the American regulatory landscape.
“The first thing I noticed was that he [Wei Zhou] was very, very sharp, but he was not understanding what was going on with the SEC,” says White. “I was very troubled by his naivete and lack of understanding. They seemed more into building the business rather than the regulatory side.”
Binance.US was created in 2019 as a legally separate company. In order to comply with U.S. regulations, Binance.US has fewer offerings, listing around 100 coins, while Binance lists 500.3Last month, Binance.US raised its first funding round and was valued at $4.5 billion. (Americans using a VPN, according to experts, can still access the main platform relatively easily.)
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But while Binance.US was created as a nod to regulator concerns, a succession of CEOs at Binance.US hasn’t helped the company’s reputation. First, Catherine Coley, a former executive at Morgan Stanley and Ripple, a U.S. crypto company, was appointed CEO in 2019 only to leave the company under unclear circumstances in 2021. Since then, she has dropped from public view, with no posts on any of her previously active social media accounts — prompting headlines in crypto publications like “Where Is Catherine Coley?”
Subsequently, in a coup for Binance’s credibility in the U.S., Brian Brooks, the former Acting Comptroller of the Currency, which oversees the federal banking system from the Treasury Department, came on as CEO. But after only three months on the job, he left.
Brooks and Coley did not respond to requests for comment, and Binance.US declined to comment on their departures. A company spokesperson told The Wire, “Binance.US is committed to upholding the highest standards of compliance. We seek to maintain ongoing, productive relationships with regulators and take a collaborative approach to any engagement.”
“One thing that got my attention was Brian Brooks leaving very quickly,” says Reiners, at Duke’s Global Financial Markets Center. “You do wonder if once he was on the inside, he thought, ‘this is a company who doesn’t take regulation very seriously.’”
Brian Shroder, a former Ant Group and Uber executive, joined as CEO in October 2021. Just a few months before he took the job, according to Bloomberg reporting, the Justice Department, the IRS, and the Commodity Futures Trading Commission launched probes into, respectively, money laundering, tax evasion and insider trading on Binance.
Binance declined to comment on the investigations, and all of the federal agencies either declined to comment or did not respond to requests for comment. But experts say that much of the attention revolves around Binance’s ‘Know Your Customer,’ or KYC, checks. For example, a 2020 report by Chainalysis, a crypto forensics firm, found that out of the exchanges surveyed, Binance was home to the most illicit bitcoin activity, because the platform allowed users to trade without providing much information about their background or location.
Last year, likely in response to pressure from regulators, the company announced it was tightening these protocols. A company spokesperson tells The Wire that criticisms of Binance’s anti-money laundering and registration requirements are “laughable.”
Still, Binance’s reputation is one of dragging its heels on such matters, and friends of CZ told The Wire that he may not travel to the U.S. for fear of arrest. A Binance spokesperson says that he hasn’t traveled to the U.S. recently, but declined to comment on whether he is afraid of law enforcement action.
“Being an exchange CEO is very tough — you constantly look behind your back,” says Lee, who was the CEO of an exchange himself. “There are criminals out there, and if they do business with you, you are tainted. If there ever is a sense you are turning a blind eye, you are at risk of being at fault.”
Being an exchange CEO is very tough — you constantly look behind your back. There are criminals out there and if they do business with you, you are tainted.
Bobby Lee, founder of the first bitcoin exchange in China
Russia’s invasion of Ukraine has posed yet another conundrum for Binance. While many global companies quickly cut ties with Russia, Binance is still available to Russian users, though to be in compliance with EU sanctions, the platform has cut off accounts worth more than 10,000 euros. Before the invasion, according to recent Reuters reporting, Binance was trying to build close ties to the Russian government by handing over data regarding Alexei Navalny, the high profile Vladimir Putin critic who is now imprisoned.
Binance denied these reports to The Wire, and pointed out that Navalny’s own chief of staff has expressed skepticism about the allegations. CZ, for his part, remains adamant that using crypto to evade sanctions is a “myth,” and “nobody smart does that,” because it is traceable. A Binance spokesperson tells The Wire that “banks are much more useful for that.”
Last year, perhaps in an effort to get ahead of some of the U.S. investigations, Binance hired Max Baucus, the former U.S. ambassador to China and Montana senator, as its government relations advisor. (Baucus did not respond to requests for comment.) The company also recently announced a $200 million investment in Forbes magazine, and a $500 million investment backing Elon Musk’s takeover of Twitter.
A Binance spokesperson tells The Wire that the company is interested in these platforms due to their potential ability to educate people about crypto. “One of CZ’s perspectives is, industries in the future will be enhanced or changed by the introduction of blockchain technology,” says the spokesperson. “Of course we are interested in helping Elon Musk achieve his vision of a new Twitter.”
Binance’s supporters note that these investments can be seen as part of CZ’s effort not just to evade regulations, but to stay ahead of them and ensure they are developed smartly. Chu, the crypto angel investor, says CZ is “actively testing [regulations] and investing in different places. CZ is developing ecosystems. His execution has been extremely sharp.”
For his part, CZ says he’s not sure what the future holds for Binance, but his faith in crypto is unwavering. “I am a bad predictor of the future,” he says, “but I do know crypto will be everywhere in 10 years.” He has consistently said that he does not own other assets, claiming that 99 percent of his wealth is in crypto.
CZ — who is married but says he prefers not to have his family “in the limelight” — tells The Wire that, someday, he hopes to return to Canada to finally settle down.
“I want to retire in Vancouver,” he says. “It’s just such a nice city to live in.”
Guo, the host of the hot pot party, would like to see that as well for his longtime friend, but worries about when, or if, that day will come.
“He is the richest Chinese in the world, but he does not have freedom,” says Guo, who now lives in California. “He travels from small country to small country — that is not freedom. He has no home.”
Katrina Northrop is a journalist based in Washington D.C. Her work has been published in The New York Times, The Atlantic, The Providence Journal, and SupChina. @NorthropKatrina
