Before founding the Binance exchange, Changpeng Zhao – the richest man in the crypto industry – worked at a fast food restaurant McDonald’s.
Held on Yas Island, about 30 minutes from the city center, the Abu Dhabi Grand Prix is an annual event that brings together princes, movie stars, famous athletes, and a former software developer and burger flipper at McDonald’s.
Despite having a not very fancy background, but after just one night, the employee at McDonald’s – Changpeng Zhao (aka CZ) – entered the ranks of the richest people in the world when he became the owner of the cryptocurrency exchange Binance.
According to Bloomberg, CZ is an influential figure in the UAE. He currently owns an apartment in Dubai and regularly hosts parties near Burj Khalifa, the tallest building in the world, to meet with Abu Dhabi royals who want to bring Binance to the country.
Succeeding thanks to Cryptocurrency
According to Bloomberg Billionaires Index, Zhao’s net worth is now up to $96 billion, surpassing some other names such as Mukesh Ambani, Mark Zuckerberg…
However, this fortune could be larger than that if you take into account the amount of cryptocurrency of the 44-year-old billionaire. In addition to Bitcoin, CZ is holding a large amount of Binance coin (BNB), the company’s token. In 2021 alone, the value of BNB has increased by 1,300%.
However, the company’s future depends on its relationships with regulators around the world and finding a convenient location for its headquarters. Not only banned in China, but Binance is also investigated by the Department of Justice (DOJ) and the US Internal Revenue Service (IRS) for suspicions of aiding money laundering and tax evasion.
Even so, Binance still remains an example of crypto success.
Binance’s spot and derivatives trading revenue overwhelms other crypto exchanges. Photo: Bloomberg.
According to Bloomberg trading fee and volume analysis, the exchange has generated at least $20 billion in revenue in 2021, triple Wall Street observers’ expectations for Coinbase, another crypto company that has just had an IPO with a market value of 50 billion USD.
“Coinbase might appear to be the 800-pound gorilla from a U.S. perspective, but Binance is significantly bigger,” said Chris Brendler, an analyst at DA Davidson & Co.
Zhao refused to comment on this. Binance also disputed the accuracy of CZ’s market value and net worth figures released by Bloomberg.
At the Bloomberg New Economy Forum in Singapore, CZ explained the numbers behind the meteoric rise Binance made in 2017.
In the past 24 hours, the exchange’s trading volume at one point reached 170 billion USD. On its worst days, the number can still reach 40 billion USD, more than four times what it was two years earlier.
“I don’t care about wealth, money, or rankings,” Zhao said in an interview in November. He even said he was prepared to give away almost all of his fortune before he died.
Zhao has many reasons to worry about the company’s future. In addition to the DOJ and IRS, the Commodity Futures Trading Commission (CFTC) is also investigating market manipulation, insider trading, and crypto-related product trading by US users of Binance. Besides the US, the company is also targeted in the UK, Japan, Germany…
The company spokesperson said that Binance is “working with regulators around the world takes its compliance obligations very seriously.”
“I’m not an anarchist. I don’t believe that human civilization is advanced enough to live in a world without rules,” Zhao said.
The cryptocurrency market capitalization is hovering around the $2,090 billion threshold. Three years ago, this number was only about $135 billion.
However, the Bitcoin price is down more than 8% this year, to below $42,400 per coin, far below the ATH of nearly $69,000 in early November. Market extremes even dragged Coinbase’s stock price down 35% in the past 2 months.
In legal matters, similar to Binance, some other businesses like BitMex also face many difficulties. In August 2021, BitMex paid $100 million to settle issues with the CFTC and the Financial Crimes Enforcement Network. The company had previously been accused of allowing illegal derivatives trading and violating anti-money laundering laws.
Used to sell a house to buy Bitcoin
Zhao is a Canadian citizen but was born in Jiangsu province, China. It was not until CZ was 12 years old that his family moved to Vancouver.
He was introduced to technology at a young age and studied computer science. Zhao quickly found a job in the financial sector in Tokyo and New York, including four years at Bloomberg LP, the parent company of Bloomberg News.
Zhao’s road to crypto riches began in Shanghai in 2013. During a poker match with Bobby Lee, the CEO of BTC China at that time, and investor Ron Cao, Zhao was encouraged to invest 10% of net worth into Bitcoin.
After spending some time to research, he decided to sell his apartment to buy Bitcoin. In 2017, Zhao officially founded Binance.
Binance has become the leading destination for trading altcoins, the concept of coins/tokens other than Bitcoin. According to CoinGecko, the company now offers the ability to trade over 350 portfolios on the exchange, twice as many as Coinbase.
Zhao is currently the richest billionaire operating in the field of cryptocurrency. Photo: Bloomberg.
Tim Swanson, head of market intelligence at Clearatology, a London-based blockchain company, said that Binance has succeeded in creating user engagement by allowing customers to use BNB tokens to reduce transaction fees.
Zhao’s company is currently the largest derivatives trading provider. Initially, Binance allowed customers to open accounts using email addresses. The exchange focuses on crypto-to-crypto transactions and limits interactions with traditional banks and regulators.
In August, the company announced that all new users must verify their identities and limit withdrawals to non-compliant individuals.
Binance has never had an official headquarters. Although established in China, this exchange has continuously run to Japan and Malta. Despite having a large presence in Singapore, Binance also had to leave soon when it was unable to register as a local exchange.
In the legal filing, the company’s lawyers said that Binance was incorporated in the Cayman Islands, which is well-known for being an offshore tax and regulatory haven. The ability to operate from anywhere has made it difficult for regulators to establish jurisdiction over the company.
“Their approach was, ‘We don’t need a regulator, we are decentralized.’, that worked really well for growing and scaling and product innovations,” commented Brendler.
However, to raise money from foreign investors, Zhao needed to change Binance. Investors tend to want the company to have some sort of government oversight to ensure its ability to operate legally.
In the UAE, Binance signed an agreement with the Dubai World Trade Center authority to develop a regulatory framework for cryptocurrencies.
Previously, Binance.US, a separately regulated exchange, appointed a former US acting comptroller of the currency as CEO to address regulatory concerns. However, his journey ended quickly when it lasted only 3 months.
By the end of 2021, Binance continued to seek to raise money from property funds in the US in pursuit of its IPO goal. The Wall Street Journal reports that former executives estimate the company could be valued at as much as $300 billion.
If the Binance IPO is successful, Zhao will definitely become the richest person in the world, surpassing both Elon Musk and Jeff Bezos.