Changpeng Zhao, commonly known as CZ, is the founder and former CEO of the world’s largest crypto exchange, Binance. But the billionaire’s stratospheric success has not been without its share of turbulence. Zhao’s rise to becoming the wealthiest crypto personality has been marred by legal challenges and controversies, including a brief stint of imprisonment in California. This article explores CZ’s remarkable journey from humble beginnings to billionaire status, despite legal pressures and regulatory challenges.
Who is CZ?
Changpeng Zhao is a Chinese-born Canadian entrepreneur who rose to the rank of foremost crypto billionaire through his relentless efforts. Born in Jiangsu, China in 1977, Zhao immigrated to Canada with his family when he was 12. To support his family, he took up several jobs, including working as a fast-food clerk at McDonald’s.
Education and Early Career
Zhao graduated in Computer Science from McGill University in Montreal, Quebec. His educational background provided a strong foundation in technical expertise, which proved invaluable in the tech and finance industries. His interest in technology was sparked by his father’s investment in a state-of-the-art 286 DOS computer. This early exposure fueled his lifelong passion for computing, programming, and digital innovation, ultimately leading him to become a pioneer in cryptocurrencies and blockchain.
After his graduation, Zhao was selected for an internship in Tokyo, where he worked as a subcontractor for the Tokyo Stock Exchange. Later, he was hired by Bloomberg Tradebook, where he developed the futures trading software. Notably, these early working periods shaped Zhao’s career as he ventured into entrepreneurial pursuits, showcasing his expertise in financial markets and technological synergy.
CZ’s Business Career
Changpeng Zhao’s entrepreneurial journey began in 2005 when he relocated to Shanghai and founded Fusion Systems, a pioneering tech startup specializing in high-frequency trading platforms. In 2013, CZ learned about Bitcoin through Bobby Lee, brother of Litecoin Managing Director Charlie Lee. Captivated by Bitcoin’s potential, he decisively invested in the crypto, despite family concerns.
Binance Founder’s Crypto Career
Beginning his crypto career with Bitcoin wallet provider Blockchain.info, Zhao also served as Chief Technology Officer at OKCoin, a prominent crypto exchange in China. Building on his extensive expertise in crypto and blockchain, Zhao launched Binance in 2017, quickly becoming the world’s largest cryptocurrency exchange. Through Binance, CZ invested $500 million to support tech billionaire Elon Musk’s Twitter acquisition.
CZ’s Role in Binance
While Zhao initially heard about Bitcoin in 2013, he learned about the crypto’s potential to transform traditional finance. Captivated by the decentralized nature of cryptocurrencies, Zhao became an ardent supporter, championing their widespread acceptance. Determined to fuel the growth of digital assets, CZ actively participated in crypto communities and shared insights at blockchain gatherings.
In 2017, CZ co-founded Binance with the aim of establishing a user-oriented and innovative crypto platform. The exchange raised $15 million in an initial coin offering (ICO) and began trading within 11 days.
Surprisingly, the platform gained traction within months, especially due to Binance’s user-friendly interface, multiple crypto options, and convenient trading strategies. The exchange launched its native token, Binance Coin (BNB), in 2017 and its blockchain network, Binance Smart Chain, in 2019.
Under Zhao’s leadership, Binance has fostered a culture of transparency, innovation, and continuous improvement. Further, the exchange introduced new features and services that redefined the cryptocurrency exchange landscape. Apart from the BNB token and Binance Smart Chain, the platform introduced Binance Launchpad, Binance Futures, Binance Staking, Binance Academy, and Binance Charity. Through these pioneering efforts, Binance redefined the cryptocurrency narrative, driving a seismic shift in global finance and paving the way for a more accessible, decentralized digital economy.
Challenges & Controversies
Like many other crypto personalities, Changpeng Zhao faced severe legal challenges, sparking controversy.
China Withdrawal Suspension: In 2017, China heightened its regulatory scrutiny and Binance halted its crypto withdrawals for Chinese users, sparking concerns.
Security Breach: In 2019, Binance experienced a severe security breach when hackers stole user API keys, two-factor authentication credentials, and other sensitive data. This resulted in the Binance clients losing about 7,000 Bitcoins, which Binance swiftly reimbursed, further enhancing its security measures.
Alleged Insider Trading: In 2021, there were significant allegations about Binance’s insider trading. While reports and rumors circulated about unfair trading practices on the exchange, Binance denied the allegations, emphasizing its commitment to fair trading practices and platform integrity.
FTX Acquisition Plans: In November 2022, CZ had plans to buy the defunct crypto exchange FTX exchange, however, he later withdrew the bid due to shortage of funds.
SEC and CFTC Charges: In 2023, the Commodity Futures Trading Commission (CFTC) filed a civil enforcement action against Changpeng Zhao and three entities that operate the Binance platform with numerous violations under the Commodity Exchange Act (CEA) and CFTC regulations. In addition, the US Securities and Exchange Commission (SEC) filed a lawsuit, citing 13 charges against Binance and Zhao.
Binance’s Prolonged Lawsuit
The CFTC lawsuit alleged that Binance Holdings Limited, Binance Holdings (IE) Limited, and Binance (Services) Holdings Limited (together, Binance) “operate the Binance centralized digital asset trading platform along with numerous other corporate vehicles through an intentionally opaque common enterprise, with Zhao at the helm as Binance’s owner and chief executive officer.” Changpeng Zhao’s settlement agreement, which included millions in penalties, was overshadowed by the SEC’s lawsuit, altering the course of events.
On June 5, 2023, the SEC filed a lawsuit in the U.S. District Court for the District of Columbia against Binance and Zhao over 13 charges, including unregistered token sales, unregistered token lending products, and unregistered staking services. Later, Binance pleaded guilty to the charges and agreed to pay $4.3 billion in penalty in addition to Zhao’s 50 million criminal fine.
These incidents were followed by Zhao’s four months of imprisonment and the subsequent release. Following the release, Zhao made his first public appearance at Binance Blockchain Week in Dubai.
CZ Remains the Top Crypto Billionaire
In February 2018, Forbes ranked Changpeng Zhao as the third largest crypto billionaire. Soon, he rose to the heights to become the richest person in the crypto space in 2024 despite legal hurdles. As of September 2024, Zhao holds a total wealth of $61 billion, remaining the richest crypto billionaire and is the 25th richest person globally. Reportedly, the major source of his wealth could be linked to Binance.
Conclusion
CZ’s exemplary journey from a normal businessman to the wealthiest crypto man is a story of dedication and determination. Despite legal hazards, CZ managed to maintain his position as the most influential figure in the crypto space. His impact on the cryptocurrency ecosystem extends far beyond Binance, inspiring a new generation of innovators and shaping the future of decentralized finance.
