The richest man in China, Zhao Changpeng: Born in Lianyungang and made his fortune in Shanghai, now he is a homeless dog wandering around the world

2021 Annual Work Report

Some people think he is a liar and a devil, while others think he is the God of Wealth representing the future. He was born in Lianyungang, made his fortune in Shanghai, and is now being pursued all over the world. The world’s richest Chinese man, Canadian Zhao Changpeng, lost his dog.

A person who lives in Turkey said on Twitter that the young generation in Turkey have Changpeng Zhao’s Binance installed on their mobile phones every day. Another person said that Zhao Changpeng, a dead dog, became the richest man by cutting leeks from Chinese people. The first one was a liar and a pyramid scheme.

At a New Year’s Eve conference that just passed, media people who reported on Changpeng Zhao’s Binance issues that caused Zhao to flee China overnight joked that the biggest mistake now is not buying this Bitcoin and other virtual currencies. currency.

The Yuanverse Era and Virtual Currencies

On September 24, 2021, ten departments including the People’s Bank of China and the Central Cyberspace Administration jointly issued the “About Further Preventing and Dealing with Speculation of Virtual Currency Transactions” "Notice on Risks" clearly states that virtual currency-related business activities are illegal financial activities, and the provision of services by overseas virtual currency exchanges to residents in my country through the Internet is also illegal financial activities.

Since the end of last year, with the rise of concepts such as the metaverse, the management issues of the future virtual society have once again attracted attention. Shanghai issued a statement saying that it is necessary to "guide enterprises to step up research on the importance of the interaction between the virtual world and the real society in the future." Platform", and in fact, although many countries, including China, now ban virtual currency transactions, it is difficult to bypass tokens or digital currencies in the configuration of the entire future virtual society.

Of course, the Metaverse era is still very early. In the Chinese capital market, Metaverse analysts have long constructed the Chinese Metaverse. Now the Metaverse is just a bag. For example, a public relations company installs a virtual character. It has become a Yuanverse company, and probably only investors believe this (everyone knows that this is a lie at least now). In fact, under China's regulatory background, the development may now be encouraged to build digital twins, VR education, virtual tourism and other projects that relatively support entities based on VR and other technologies, while other tokens will be banned. One company creates a virtual avatar, and another company creates a virtual anchor. It is pure deception.

However, facing the future, it is probably necessary to pay attention to these things.

The richest Chinese man in the Devil’s Virtual Coin Exchange

Zhao Changpeng is like a devil, and this exchange is even more like a ghost.

This exchange does not have any license or entity...except for the just reported report that Canada may allow it to operate as an exchange, the whole world does not recognize it.

As one of the fastest growing major financial exchanges in the world, it has neither a headquarters nor an official address. It has not yet obtained a license in the countries where it operates. Not only that, until recently, its chief executive Officials even avoided talking about their own place of residence.

Central banks and government agencies around the world, including China, have banned virtual currency transactions, and the U.S. Department of Justice and others are investigating. But Binance is already the leading trading platform giant in the field of digital currency, equivalent to the cryptocurrency version of the London Stock Exchange, the New York Stock Exchange and the Hong Kong Stock Exchange combined. According to data provider CryptoCompare, Binance handles $76 billion in daily transactions in cryptocurrencies such as Bitcoin and Ethereum, which is more than its four largest competitors combined.

According to Caijing magazine, Binance founder Changpeng Zhao is worth US$90 billion (equivalent to 573.3 billion yuan), surpassing Nongfu Spring Chairman Zhong Suisui’s 424.4 billion yuan, ranking first among Chinese people. The richest man.

How Ghost Exchange grew up

One of the fastest growing major financial exchanges in the world has neither a headquarters nor an official address. In the countries where it does business, it also has Not only does it not have a license, but until recently, its CEO even avoided talking about where he lived.

Binance, which was founded only four years ago, is now a leading trading platform giant in the field of digital currency. It is equivalent to the cryptocurrency version of the London Stock Exchange, the New York Stock Exchange and the Hong Kong Stock Exchange. The sum of the three. According to data provider CryptoCompare, after a period of rapid growth, Binance now handles $76 billion in daily transactions in cryptocurrencies such as Bitcoin and Ethereum, which is more than its four largest competitors combined. .

However, the largely unfettered and unregulated development of the entire cryptocurrency industry, and Binance in particular, in recent years is about to become history.

Financial regulators are increasingly concerned that digital assets are growing so fast that they are now systemically important. Until recently, some people dismissed digital assets as a fad. Bank of England official Jon Cunliffe referenced the 2008 crisis caused by subprime mortgages in a speech in October, saying of cryptocurrencies, “If the financial system Something in it is growing very fast, and the growth is basically outside the scope of regulation. At this time, the departments responsible for maintaining financial stability must remain vigilant.”

Binance is the most concerned by regulators. object. In recent months, regulators in more than a dozen countries have issued warnings to Binance users, reminding them that the exchange is not registered and does not have the qualifications to provide various services.

According to former Binance executives, the U.S. Securities and Exchange Commission (SEC) is investigating Binance’s U.S. business model, and the company has obtained business licenses in many U.S. states. . A Binance executive said the SEC asked Binance US to provide a list of information, including an explanation of the relationship between its U.S. operations and its global operations. According to a former executive of the company, the U.S. Department of Justice is investigating whether Binance is involved in money laundering. Bloomberg News has previously reported on the U.S. Department of Justice’s investigation into Binance.

For this cryptocurrency exchange, the U.S. market is a "big test" for it. It has stated that it hopes its U.S. subsidiary can be listed in the next few years. Binance hired a person who had worked for a financial regulator to build its U.S. business, Binance.US, but he left in August, just three months after taking office.

Some former executives at the company say they are concerned that Binance’s data is in the hands of programmers in China, where the company was founded. They say this risks a problem similar to TikTok, where the Trump administration tried to "block" the social media platform out of concern that the Chinese government might have access to TikTok's user data (a claim the company denies).

Binance founder and CEO Changpeng Zhao said in an interview that Binance needs to comply with the requirements of regulatory agencies. This includes the company needing to obtain a formal license, he said.

"We are conducting a very legal business." He said that the reason why the business is growing rapidly is because the company has gained the trust of users. But "If you look at the people who use cryptocurrency around the world, it may be less than 2% of the total global population." Zhao Changpeng said, "To attract the remaining 98% of people, we need to accept regulation."

Changpeng Zhao also said that Binance is setting up an office and corporate headquarters. He previously thought that this was an old-fashioned approach, but regulatory agencies have requirements in this regard. He declined to disclose the location of his office or headquarters. In August this year, Binance stated on its website that in order to prevent people from using Binance to illegally transfer funds, it had made user identity verification a mandatory requirement.

Representatives for Binance and its U.S. business, Binance.US, declined to comment on the SEC and Justice Department investigations. The two companies said they are two separate entities. Binance spokesperson Jessica Jung said, “We will cooperate with the work of regulatory agencies in various countries and will take our compliance obligations seriously.” She also said, “As Binance develops, cryptocurrency trading and supervision will also develop. Vice versa."

Binance.US spokesman Matthew Miller said, "We have taken strong protective measures to ensure that we only meet the appropriate needs of users and improve services. Data can only be obtained at the request of quality or regulatory authorities." He also pointed out that all US user data is stored on servers in the United States.

Since Binance does not have a fixed office, regulators are confused because they don’t know whose jurisdiction Binance falls under. Binance’s parent company, Binance Holdings Ltd., is registered in the Cayman Islands. But according to the Cayman Islands financial regulator, the terms under which Binance was registered did not allow it to operate a cryptocurrency exchange in the country. Binance spokesman Jung said the company does not operate an exchange locally.

However, before September, Binance’s Australian website always showed that Binance Holdings was an entity that provided cryptocurrency trading services to Australian users. Jung pointed out that this was "just a clerical error."

Changpeng Zhao said that Binance has 3,000 employees worldwide. Based on the volume of transactions the company handles and the fees it charges, company insiders believe Binance would be worth as much as $300 billion if it went public, according to former Binance executives.

If this is the case, Zhao Changpeng will become extremely rich. He has said that he is Binance’s largest shareholder.

Changpeng Zhao is a star in the cryptocurrency industry with 3.9 million followers on Twitter, where he is better known as CZ, after his initials. According to Binance spokesman Jung, the company’s security staff told Changpeng Zhao and other executives to simply refuse to answer if anyone asked where they lived.

She said that Zhao Changpeng has not been covering up his whereabouts recently. He has been staying in Singapore during the COVID-19 epidemic in the past two years. According to someone who knows Zhao Changpeng, he often rides an electric scooter to meetings.

44-year-old Zhao Changpeng was born in China. He said that he moved to Canada with his parents when he was 12 years old. After studying computers for a period of time, he worked at several financial companies in Tokyo and New York, including Bloomberg LP, where his job was to develop futures trading software.

He said that the first time he heard about Bitcoin was at a card game in Shanghai in 2013. At that time, digital currencies “minted” by computer programs had been around for a few years. Although they do not have the same government recognition as fiat currencies, they still attract a group of computer-savvy people, including those who have become disenchanted with the financial system after the 2008 financial crisis.

At the time, such currencies were very complex to trade. Not only are there few trading platforms, but the price fluctuations are also extremely violent. In addition, exchanges such as Mt. Gox have been hacked, which has also affected people's confidence.

Changpeng Zhao was attracted by the idea of ??decentralized currency, which could be used anywhere without going through a bank or going through all kinds of red tape. He said in the interview, "We can use this technology to improve the financial freedom of people around the world."

He sold his apartment in Shanghai, converted the money into Bitcoin, and then went to several Cryptocurrency Startup Jobs. In 2017, he co-founded Binance with a team of programmers.

Initially, Binance’s business mainly focused on transactions between Bitcoin and other digital currencies, but it did not allow users to exchange digital currencies into mainstream currencies. Zhao Changpeng said that when the company was first established, it did not need a bank account or a headquarters.

Binance has added nine languages ??to its website to differentiate itself from rivals that only offer services in English. Some traders say the platform developed by Binance is also easy to use.

In July 2017, Binance issued its own digital currency Binance Coin (BNB) for the first time, raising $15 million at the time. It described its business in a 2017 offering prospectus and noted that most of the other investors were Chinese individual investors.

Binance attracts users from all over the world, including users from countries with underdeveloped financial systems, such as South Africa, Russia and India. In just six months, Binance became the world's largest cryptocurrency exchange, but it soon ran into trouble with regulators. In the summer of 2017, just two months after Binance started operating in Shanghai, the Chinese government imposed a ban on cryptocurrency exchanges, fearing that they would be used to illegally transfer funds abroad.

Changpeng Zhao recalled in an online technology conference that a Binance team of more than 30 people later left China and went to Japan. In 2018, Japan’s financial regulator also issued a warning to Binance, reminding it that it cannot provide trading services to the public without obtaining a business license.

Since then, Binance has no longer announced the specific office location. Zhao Changpeng said that the company's employees are distributed around the world and they work remotely from home.

Aija Lejniece, a Paris-based lawyer, said, “Binance seems to be everywhere, but it seems to be nowhere to be found.” A group of investors said that in May, due to the An's trading site was frozen for more than an hour, causing them to lose money and they are now trying to get the money back. Lenis is the lawyer representing the group. Binance declined to comment, but it previously said it had taken immediate steps to communicate with users affected by the outage, while also providing compensation to "those users who suffered actual trading losses."

As cryptocurrency enthusiasts develop more and more digital currencies, the number of coins available for trading on the Binance platform exceeds many of its peers. Among them are fan tokens of European football clubs and Dogecoin, which was highly sought after by investors earlier this year.

Unlike stock exchanges, which must obtain regulatory approval in each jurisdiction, Binance's operations are all concentrated on one trading platform - Binance.com, which it claims does not Establish headquarters in any country. In 2019, the year after Japanese regulators issued a warning to Binance, data collected by research firm The Block showed that there was still user traffic from Japan on the Binance platform. Binance spokesman Jung declined to comment on the matter.

Binance begins offering cryptocurrency-related derivatives. With a deposit of just 80 cents, users can trade the equivalent of $100 in Bitcoin or other digital currencies. Later, Binance restricted such derivatives.

In 2019, Binance began allowing users to exchange cryptocurrencies into traditional currencies such as U.S. dollars, thus connecting itself to the banking system.

Some former Binance executives said the company paid YouTube celebrities to make videos telling people how to get started. An outreach team also contracts day traders in Middle Eastern and African markets who manage small groups on Facebook and other social networks.

Within the company, Binance also pits teams against each other to see the best growth strategies win. "We encourage internal competition." Zhao Changpeng said.

Binance.com is also favored by American users, but it turns out that it is not easy to maintain its dominant position in the American market. In April 2019, the SEC released a document outlining a set of tests to determine which digital assets may be considered securities subject to its regulation. Changpeng Zhao directed American users to Binance.US, which offers relatively few types of cryptocurrency transactions and does not involve derivatives.

According to a former Binance executive, at the end of 2020, the SEC asked Binance.US to provide detailed business information, including who controls users’ digital wallets, where cryptocurrencies are stored, and Binance.US Details of the agreement with parent company Binance Holdings.

In May 2021, Binance.US hired Brian Brooks as CEO. He served as the Office of the Comptroller of the Currency (Office of the Comptroller of the Currency) during the Trump administration. Currency), and also held management positions at Binance competitor Coinbase Global Inc.

After taking office, Brooks began to raise funds from American investors. This would reduce Zhao's control by introducing independent members to the board. According to some former executives, Changpeng Zhao currently controls the majority of Binance.US.

They said Brooks also wanted to control software moved from China in the United States. Electronic messages reviewed by The Wall Street Journal show that a month before Brooks took over, Binance.US employees had to turn to colleagues in Shanghai to resolve software issues with some U.S. accounts. As late as this summer, developers in Shanghai were maintaining software code to support digital wallets for U.S. users while also working on the engine that coordinated transactions, according to former executives.

According to people familiar with the matter, in early August, when a US$150 million financing deal with 12 US investors was about to be completed, Brooks and Changpeng Zhao had conflicts over the selection of new directors.

Some of the people familiar with the matter said that Brooks believes that the investors who lead the round should automatically get a director seat, and the board of directors should elect an independent director, but Changpeng Zhao hopes that he can control the appointment of directors. In addition, according to people familiar with the matter, Zhao Changpeng also avoided transferring code management work away from Shanghai.

Brooks resigned on August 6. Several employees on the legal and compliance teams also subsequently left the company, according to people familiar with the circumstances of his departure.

Binance spokesperson Jung said that Binance’s technology and data are not located in China. Binance.US spokesperson Miller said, "All personally identifiable information of U.S. customers is stored on the Amazon Web Services platform in Richmond, Virginia."

Miller also said, “Binance.US managers control the company’s direction, company assets, and user account and data supervision.” He pointed out that Binance.US employees are located all over the world.

Miller said that Binance.US is raising funds through other channels and that it plans to introduce two new investors to the board of directors. The new members will provide additional support to the company as it prepares for its U.S. initial public offering (IPO). It provides more oversight. Changpeng Zhao said that he hopes Binance.US can be listed before the end of 2024.

Although Binance has encountered troubles in the regulatory field, this still cannot stop its development. According to data provider CryptoCompare, Binance.com’s spot trading volume increased by 10% in September from the previous month, and its monthly spot trading volume has topped the list for 15 consecutive months.

Changpeng Zhao said he hopes Binance will grow at a more moderate pace. He said, “We hope that other exchanges can grow a little bit so that they can share the user pressure with us.”

The craziest year for cryptocurrencies in 2021

Bitcoin is close to $70,000, a ‘petcoin’ memecoin worth billions, a blockbuster Wall Street listing, and an all-out China crackdown: 2021 is crypto’s craziest year yet, even with the industry’s volatility The same goes for standard measurements.

At the beginning of 2021, investors large and small have poured into digital assets. Since then, cryptocurrencies such as Bitcoin have been in the spotlight, and the language of cryptocurrencies has taken root in investors’ lexicon.

Here are some of the major trends dominating cryptocurrencies this year.

1/Bitcoin: Still No. 1

The original cryptocurrency remains the largest and best-known coin, although numerous challengers follow.

Bitcoin surged more than 120% from January 1, hitting a then-high of nearly $65,000 in mid-April. Bitcoin's rally has been fueled by a tsunami of cash from institutional investors, growing acceptance by major companies like Tesla and Mastercard, and growing favor among Wall Street banks.

Spurring investor interest is Bitcoin's so-called inflation resistance - its supply is capped. Record-breaking economic stimulus package drives Bitcoin price higher. The promise of quick profits and easier access to Bitcoin through a rapidly developing infrastructure also helped attract buyers amid record-low interest rates.

Coinbase Global, an American cryptocurrency trading platform, went public in April, with a valuation of US$86 billion on its first day of listing, making it the largest cryptocurrency company to date. Symbolizing Bitcoin’s acceptance by the mainstream.

"It has managed to get on the radar of both bond and equity investors," said Richard Galvin of cryptocurrency fund Digital Capital Asset Management.

However, Bitcoin remains volatile. It slid 35% in May before surging to a record high of $69,000 in November as inflation rose sharply in Europe and the United States.

Notable skeptics remain, with JPMorgan CEO Jamie Dimon calling it "worthless."

2/The Rise of Meme Coins

Even though Bitcoin remains the first choice for investors to get involved in cryptocurrencies, there is a slew of new coins entering the space, some would call it joke.

From Dogecoin and Shiba Inu to Squidward gaming tokens, memecoins are a loose collection of tokens rooted in internet culture that often have little practical use.

Launched in 2013 as a derivative of Bitcoin, Dogecoin surged more than 12,000% to an all-time high in May before plunging nearly 80% in mid-December. Shiba Inu Coin also once ranked among the top ten digital currencies.

The memecoin phenomenon is related to the "Wall Street Bet" movement, in which retail traders concatenate online and pile into stocks such as GameStop, squeezing hedge funds' short positions.

With spare cash on hand during the coronavirus lockdowns, many traders are turning to cryptocurrencies, even as regulators warn about volatility.

“It’s all about financial mobility,” said Joseph Edwards, head of research at cryptocurrency brokerage Enigma Securities.

“Although coins like Dogecoin and Shiba Inucoin themselves are full of speculation, the funds invested in these currencies are driven by the intuition of ‘why should I not use money to make money and use savings to make money?’”

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Figure: The rise of meme coins

The red line represents Shiba Inu Coin and the blue line represents Dogecoin

3/Regulation: a big shadow of the cryptocurrency market

As funds flock to cryptocurrencies, regulators are concerned that they could be used to launder money and pose a threat to global financial stability.

Regulators have long been skeptical of cryptocurrencies and have demanded more authority over the industry, while some have called on consumers to be more vigilant about the violent swings in cryptocurrencies.

With new regulations on the horizon, the cryptocurrency market is nervous about the risk of a crackdown.

When the Chinese government imposed restrictions on cryptocurrencies in May, Bitcoin plummeted by nearly 50%, dragging the overall cryptocurrency market lower.

"Regulatory risks are a top priority because these regulations determine the life or death of financial services practitioners," said Stephen Kelso, global head of markets at ITI Capital. "Regulators have come a long way, and they are catching up."

4/NFT

As memecoin trading booms, another one that has been largely ignored in the crypto-asset family Highlighted members also grabbed the limelight.

2021 is the year of the explosion of non-fungible tokens (NFT). NFTs are cryptographic strings stored on a blockchain digital ledger that can represent unique ownership of artwork, videos, or even tweets.

In March this year, American artist Beeple sold a digital art work at a Christie's auction for nearly US$70 million, becoming one of the three most expensive auction works by a living artist. .

This auction indicates that NFT will come in a hurry.

Third-quarter sales reached $10.7 billion, more than eight times the previous quarter. As trading volume peaked in August, the prices of some NFTs rose so quickly that speculators could double their profits in just days or even hours.

John Egan, CEO of L'Atelier, a research company owned by BNP Paribas, said that the popularity of cryptocurrencies and NFTs may also be related to the decline in social mobility, with young people entering this market in the hope of getting rich quickly because of housing The price of traditional assets has soared, making it beyond the reach of young people.

Although some of the world's top brands, from Coca-Cola to Burberry, are already selling NFTs, regulatory rules are not yet in place, meaning large investors are largely staying away from NFTs.

“I don’t think there will be a situation where licensed financial institutions are actively and boldly trading (these) digital assets in the next three years,” Egan said.

Figure: Sales of NFT online trading platform OpenSea (in billions of US dollars)