Changpeng Zhao, commonly known as CZ, is more than ever now a prominent figure in the world of cryptocurrencies and blockchain technology. And he can now add "target" to his resume, at least when it comes to the interest of U.S. regulators and the Securities Exchange Commission (SEC).
As the CEO and founder of Binance, now one of the largest and most influential cryptocurrency exchanges, CZ has played a significant role in shaping the digital asset industry, good and bad. With his entrepreneurial spirit and innovative mindset, he has propelled Binance to become a global powerhouse in the crypto space. But he's also been attributed roles in the wrecking of competition that were on the rocks and sought out his help as a last resort as well. However, CZ wasn't always on top of the crypto world. He had a start like everyone else in a very different place.
Early Life and Career
Changpeng Zhao was born in Jiangsu, China, in 1977, in what was still Communist China at the time. After his family moved to Canada when CZ was age of 12, he then had a chance to expand his view of the world. Ultimately, CZ made it to college and pursued his studies in computer science at McGill University in Montreal. Like many graduates afterwards, CZ looked for a career start in the financial industry. That path placed him in a number of big name companies, including Bloomberg and Fusion Systems. CZ's experience in building trading systems early on as well as high-frequency automated trading platforms gave the soon-to-be crypto CEO the early, invaluable knowledge he needed about marrying financial markets with computers.
CZ's also entered into the cryptocurrency world a bit late, picking up on Bitcoin in 2013 as an employee at OKCoin. The fit was natural as a Chinese cryptocurrency exchange. While there, CZ recognized the disruptive potential of blockchain technology, and he became deeply involved in the crypto community and decentralization.
By 2017, CZ was firmly established with his own platform, Binance, a cryptocurrency exchange headquartered in Malta. Binance quickly gained popularity for its user-friendly interface, extensive range of tradable assets, and robust security measures. Under CZ's leadership, Binance witnessed rapid growth and became the world's largest cryptocurrency exchange by trading volume within just six months of its launch. He also leveraged multiple connections through neutral territories like Switzerland, which expanded his base exponentially. Binance quickly became the place to launch new projects, especially on the Binance chain.
Going Beyond Just Trading
CZ sought to build a comprehensive blockchain ecosystem that would offer a multitude of services to users worldwide. Binance expanded its offerings to include features such as Binance Launchpad, a platform for hosting token sales, and Binance Academy, an educational resource for blockchain and cryptocurrency-related topics.
Additionally, CZ launched the Binance Coin (BNB), the native cryptocurrency of the Binance platform. BNB gained significant traction and became one of the most valuable cryptocurrencies in the market. Its utility expanded beyond the Binance platform, enabling users to access various benefits and discounts. Binance Smart Chain, a blockchain platform developed by Binance, also became a prominent player in the DeFi space, attracting numerous developers and users.
The Regulatory Landscape
Being big, however, makes one a target, and that's what started happening with Binance. The most irritating thing for regulators was Binance's insistence under CZ that it did not have a headquarters location in a specific country. That statement alone not only garnered unwanted attention from regulators, it fostered their wrath as well. Governments and financial authorities around the world began scrutinizing the industry, leading to increased compliance requirements. Binance was a big poster boy target for them. CZ quickly shifted from being the rogue network to being the advocate of regulatory compliance in crypto, hoping that by cooperating with authorities, the strategy would ensure the long-term success and sustainability of Binance.
Unfortunately, none of it mattered. Strategic maneuvering in the collapse of LUNA and FTX both pinned blame on CZ as he seemed to be looking for profit advantage in the midst of chaos. That, along with simply being the most visible and problems establishing a good foothold in the U.S. plagued Binance, and now CZ is specific targeted in a lawsuit by the SEC for unauthorized securities exchanging under Gary Gensler. Ironically, Gensler was in talks about advising CZ and Binance prior to his appointment at the SEC. The chair even went so far as to offer his consulting services to Binance at the time. What a turn of events only a few years later.
Whether CZ and Binance are now facing a mafia-style shakedown from the SEC or CZ got too cocky and ran one deal too far for his own good remains to be seen. But his is a classic case of skyrocketing success and how fast it can also come crashing down. Now that he's in his real test of survival, CZ is now going to have to prove he has what it takes to truly steer crypto through a regulatory nuclear attack. If he's strategically savvy, he might even partner with Coinbase and Ripple for a consolidated counter-attack, putting the SEC on its heels for enforcement without clear authority. But that would CZ would have to put aside his ego and potentially compromise where he has so far worked alone. That may be the hardest challenge yet for Binance's CEO to overcome.