who is Changpeng Zhao, the sulphurous boss of the giant Binance?

It is the new star of the crypto ecosystem. Changpeng Zhao alias “CZ”, the CEO of the largest cryptocurrency exchange platform Binance is followed and listened to by all actors in the blockchain (a computer network that validates and records cryptocurrency transactions). The almighty boss has such an aura thatall it took was a tweeton November 6, to cause a selling panic on the FTT (the crypto issued by FTX) which caused the collapse of FTX, the second largest cryptocurrency platform created by Sam Bankman-Fried.

The aura of CZ crystallizes the passions. Today, he is considered by many netizens to be the savior of the crypto ecosystem, since – again in a tweet – he proposed to create a rescue fund to save companies affected by the fall of FTX . But others see him as a dangerous guru. Nouriel Roubini, a famous and controversial economist, for example accused Changpeng Zhao of ” walking time bomb “, stating that the latter” will become worse than Samuel Bankman-Fried during a finance summit in Abu Dhabi on November 16, 2022.

If Changpeng Zhao divides, he leaves no one indifferent in any case.

The rise of a giant

Changpeng Zhao, 45, is cosmopolitan. In 2020, he confided to the specialized newspaper Cointelegraph that he loved to be able to live in a different city each month if (he) wishes”. The story of this son of a geophysicist and programmer takes place between Canada and China, which his family left in 1989, in the midst of popular protests against the communist regime, to go into exile in North America. After studying computer science at McGill University in Montreal, CZ became a trading software programmer. In 2005, he returned to his native country and more precisely to Shanghai to launch Fusion System, a high frequency trading software company. Then the programmer/trader fell in love with Bitcoin in 2013 to finally launch his trading platform in 2017: Binance.

Knowledge in the world of traditional finance and ideal timing – just before the explosion of the price of Bitcoin which, that year, went from 1,000 euros to 16,000 in eleven months – allow him to become a leader in 6 months . Champion of the sector, he was then followed by FTX before his bankruptcy.

Successes and controversies

After a nearly five-year flawless rise of Binance, Changpeng Zhao is now considered the biggest crypto-billionaire with a personal fortune estimated by the magazine. Forbes to $17.4 billion in 2022. The platform with the yellow logo claimed on November 10 to hold the equivalent of $71 billion in cryptocurrencies and saw the equivalent of $14 billion in transactions on its platform over 24 hours. on November 21 against “only” 1.5 billion on the Coinbase platform and 500 million on Kraken, according to Coinmarketcap.

Binance is clearly in a monopoly situation and this is problematic because un monopoly is never in favor of consumers, and could create a systemic crisis if this player were to fall “, comments Alexandre Stachchenko, co-founder of Blockchain Partners and director of blockchain and cryptos at KPMG.

A monopoly that is all the more worrying since it is not known where Binance’s global headquarters are based. The crypto giant has followed the lifestyle of its creator; he has remained homeless until now. If the company tried to settle in Hong-Kong then in Japan, in Malta, no country accepted that the firm of CZ poses its luggage, except France. But if Montrouge, near Paris, has become the headquarters of Binance in France, Changpeng Zhao remains vague on his conception of the domiciliation of his company. If he assured that Montrouge is his European headquarters in an interview granted to the Parisian in April, he also floated the idea of ​​France becoming his world headquarters in other interviews.

A lack of transparency that raises the question: which country would judge Binance if it followed the path of FTX? ” Unlike FTX, Binance is a company that is well established in France since it set up a headquarters there in May 2022. The French who use its services therefore contract with the Binance France entity. If tomorrow, customers wanted to turn against the company, they could seize the French courts “says Arnaud Touati, associate lawyer at Hashtag lawyer. He recalls, however, that we would have real uncertainty as to the location of the assets, it being understood, all other things being equal, that they are kept on addresses registered on a blockchain. »

So many issues that worry regulators who are increasingly interested in the crypto giant and its CEO.

Binance in the crosshairs of US regulators

If Binance has convinced France of its good faith by having the approval of the Financial Markets Authority (AMF) to settle in France and obtain the registration of the status of Service Provider in Digital Assets (Psan) , other countries take a dim view of CZ’s platform.

In April 2021, the German regulator accused Binance “ likely to violate securities rules when the Japanese regulator repeatedly reiterated its hostility towards the cryptocurrency platform. Following the bankruptcy of FTX, a British parliamentary committee is investigating the role played by Binance in the bankruptcy of its direct competitor, remember, following a simple tweet that caused panic.

But if Binance should fear the regulator, it is in the United States. The Commodity Futures Trading Commission (CFTC) opened an investigation in September 2021 to find out whether Binance employees had committed insider trading and manipulated the markets using inside information. This financial policeman is not the only one to investigate the crypto giant. The Securities and exchange commission (Sec) also launched an investigation in February 2022 on Changeng Zhao whom it accuses of having communicated confidential information with Merit Peak Ltd and Sigma Chain, two market makers (market-makers), as well as an investigation in June, into BNB, the cryptocurrency issued by Binance, which the Sec suspects of being a hidden financial security. In other words, the BNB is accused of bringing together the same characteristics as an action without being subject to the rules on financial securities.

Faced with the insistent gaze of regulators who are gradually turning to the crypto giant, Changpeng Zhao is trying to show his credentials by unveiling proof of reservations and by calling on the States on November 14 to better regulate the platforms, during a conference on the sidelines of the G20 in Bali. A surprising request, for this entrepreneur who has always spoken out against regulations, probably masking a fear of being caught up by the financial police.