Changpeng Zhao, or CZ, is a name linked with the Cryptoindustry. His extraordinary journey from humble beginnings to becoming the CEO of Binance, one of the world’s largest cryptocurrency exchanges, is an inspiring story. Binance is the world’s top blockchain ecosystem, offering the world’s largest digital asset exchange as part of its product portfolio. As of March 2024, Zhao is the world’s 29th richest person, with an estimated net worth of $39.6 billion.
Background and Work Experience in the Tech Industry
Zhao worked at Bloomberg Tradebook in the early 2000s, developing trading systems for futures and equities. He joined Blockchain.info in 2005 and founded Fusion Systems in 2005. In 2013, as CTO, he joined OKCoin, one of China’s largest cryptocurrency exchanges. CZ is also an advisor to Blockchain.info and co-founder of BijieTech, which provides blockchain solutions to the financial industry. Zhao was ranked third on Forbes’ list of “The Richest People in Cryptocurrency” in 2018, with an estimated net worth of $1.1-2 billion.
The Burger Story in Taiwan
The “Burger Story” is a well-known story about CZ; he attended a cryptocurrency conference in Taiwan in 2018 and couldn’t find a place to eat. Instead, he purchased burgers using Bitcoin, requesting delivery in return for Bitcoin. This triggered a surge of interest in the crypto community, with many volunteering to deliver burgers and debating the ramifications of utilizing cryptocurrency for regular transactions. CZ’s request was granted, and he received his burgers paid for in Bitcoin. This narrative exemplifies the crypto community’s spirit of invention, adaptation, and conviction in cryptocurrencies’ potential for real-world applications.
Changpeng’s professional background significantly concentrates on trading systems and cryptocurrency exchanges. He has been at the forefront of the cryptocurrency sector and has had a substantial impact on its development throughout time.
Binance
Binance, founded in July 2017, received $15 million through an initial coin offering and began trading eleven days later. In less than eight months, Binance became the world’s largest cryptocurrency exchange.
In 2017, Zhao introduced Binance Coin, a utility coin that offers trading fee reductions. In 2019, Binance announced Binance Smart Chain, an Ethereum competitor with smart contract capability.
Legal Battles
Civil Issues
In March, the C.F.T.C. filed a civil lawsuit against the firm and Mr. Zhao, accusing them of breaking financial regulations intended to protect U.S. investors. In June, the Securities and Exchange Commission accused Binance and Mr. Zhao of mismanaging consumer cash and lying to regulators.
Notably, the Securities and Exchange Commission, intended to oversee digital assets like stocks and bonds, did not participate in the settlement on Tuesday. The agency did not reply to a request for comment. In its action against Binance, the SEC claimed that the business shifted billions of dollars in user cash to a second company, Merit Peak Limited, owned by Mr. Zhao.
Legal Condemnation
In November 2023, Zhao resigned from Binance and paid a $50 million fine as part of a guilty plea to U.S. federal charges. Binance also agreed to plead guilty and pay $4.3 billion in fines. Zhao pled guilty to violating the American Bank Secrecy Act and FinCEN anti-money laundering requirements. As part of plea bargain negotiations, Binance admitted to operating an unlicensed money-transmitting business and violating the International Emergency Economic Powers Act.
According to the U.S. Treasury Department news release, the cryptocurrency exchange failed to install safety systems to avoid suspicious transactions with entities such as Hamas, the Palestinian Islamic Jihad, Al Qaeda, and the Islamic State of Iraq and Syria (ISIS).
Binance agreed with the US Department of Justice, the Commodity Futures Trading Commission, the Office of Foreign Assets Control, and the Financial Crimes Enforcement Network to investigate past registration, compliance, and sanctions concerns. CZ stated,
I deeply regret my failure, and I am sorry.
The judge expressed concern about Zhao’s disregard for U.S. banking laws, which would have hindered the company’s meteoric expansion. According to prosecutors, Zhao instructed his staff to “better ask for forgiveness than permission” regarding the company’s attitude to US law.
“This wasn’t a mistake,” Justice Department lawyer Kevin Mosley told Jones. “When Mr. Zhao violated the BSA, he was well aware of the requirements.”
The Justice Department has pushed Congress to toughen penalties for abuses of the US banking system, which may allow billions of dollars to move illegally. The letter contends that sentencing standards must be better calibrated to reflect the gravity of these offenses.
Bankman-Fried, who defended his allegations, lost after a six-week trial. He blamed errors and unlucky circumstances rather than top-down fraud. Judge Lewis Kaplan ordered a 25-year term, half of what prosecutors requested.
Meanwhile, Zhao pleaded guilty and apologized to the court. A court praised Zhao for accepting responsibility but was concerned by his choice to disregard US banking regulations. The punishment was much shorter than the three years sought by prosecutors, while defense counsel asked for no prison time.
Returning to UAE Before Sentencing
Binance CEO Changpeng Zhao may not return to his Dubai home after being released on bond, as US prosecutors have asked the judge to allow him to stay in the United States until his sentencing. CZ might be in the US for about three months, with his sentence set for February 2024 if authorized. The judge allowed his release based on a poignant statement in which CZ stated his wish to fix the situation rather than take advantage of his UAE citizenship, which has no extradition rules. He said,
We need to respect the market, with a level of caution too. It goes up and down in cycles. And especially the fact that it doesn’t always make sense.
Conclusion
Changpeng Zhao, CEO of Binance, a prominent cryptocurrency exchange, pled guilty to money laundering charges in the United States on November 21, 2023. According to the US Treasury Department, Binance failed to deploy security measures to prevent suspicious transactions with groups, including Hamas, the Palestinian Islamic Jihad, Al Qaeda, and ISIS. If his request is granted, his term will begin in February 2024.
