Anyone interested in cryptocurrency must have heard of the name Changpeng Zhao, who was once a legend in the cryptocurrency world.
This young man from Jiangsu founded the Binance platform, became the head of the world's largest cryptocurrency exchange, and was listed on the global rich list. His entrepreneurial experience is definitely legendary!
But after the legend, there was a mess. When he thought he had control over the future, the hammer of the law fell mercilessly.
Not only did he have to pay a staggering fine of 53.1 billion yuan, but he also ended up pleading guilty and being jailed.
Why did Zhao Changpeng fall from the clouds in a second? And what made him pay such an astonishing fine?
The legendary rise of Changpeng Zhao: From programmer to cryptocurrency tycoon
Zhao Changpeng's story is like a blockbuster with ups and downs.
Zhao Chengpeng was born in an ordinary family in Lianyungang, Jiangsu Province. He showed great talent in mathematics since he was a child. When he was 12 years old, he moved to Canada with his parents and became a Canadian.
Living in a foreign country, he was not afraid of difficulties, but became more diligent. Eventually, relying on his own talent and hard work, he was admitted to a famous university in Canada and began his financial career.
Zhao Changpeng has never been a person who is content with being ordinary.
He gradually realized at work that the Internet and technology were quietly changing the landscape of the financial industry, and the rise of cryptocurrency made him see greater opportunities.
In 2013, he met Li Qiyuan, and it was Li's words "Bitcoin is the future" that deeply touched Zhao Changpeng.
The young Zhao Changpeng is a gambler who dares to bet everything. After identifying Bitcoin, he invested all his family assets in Bitcoin.
In the next few years, the price of Bitcoin will fluctuate, but Zhao Changpeng always believes that the cryptocurrency has great development potential.
In 2017, Zhao Changpeng, who had a lot of industry experience, founded Binance.
In just a few months, Binance's trading volume skyrocketed, the number of users exceeded 6 million, and it became the world's largest cryptocurrency exchange. For Zhao Changpeng, Binance's success is the best reward for his long-term struggle.
But at the same time, great success also means that he has to deal with more challenges and risks. The rise of Binance has certainly touched the nerves of financial regulators in countries around the world.
Binance’s Crazy Expansion
The madness of the cryptocurrency market continues to expand, naturally attracting global attention, but along with the growth comes the close monitoring of regulators.
Although Bitcoin is called a cryptocurrency, its existence may interfere with the normal economic order, especially by infinitely reducing the central bank's right to issue currency, and may even become a tool for terrorist organizations or underground industrial chains to launder money.
As the largest cryptocurrency exchange, Binance has become the target of central banks around the world.
Especially the United States!
Even though cryptocurrency trading has been popular around the world for several years, the cryptocurrency market has been in a gray area until now. Binance, as a cryptocurrency exchange, naturally has no legal protection.
In order to circumvent these complex compliance issues, Zhao Changpeng chose to let Binance adopt a relatively relaxed operating strategy in some countries.
This strategy helped Binance expand rapidly in the short term, but in the long run, it laid the groundwork for regulatory risks.
During Binance's operations in the United States, it failed to take effective anti-money laundering measures, resulting in a large amount of illegal funds being traded on the platform.
The U.S. Treasury Department and the Commodity Futures Trading Commission have conducted a multi-year investigation into Binance and found that Binance failed to prevent the flow of terrorist funds, proceeds of cybercrime, and other illegal funds through its platform.
Over the past few years, Binance has handled more than 1.5 million transactions related to violations of U.S. sanctions, including providing funding to Iran and terrorist organizations.
These actions were unbearable for the US regulators, so they decided to deal a heavy blow to Binance and Changpeng Zhao.
Faced with a huge fine of US$4.3 billion, Zhao Changpeng did not fight back, but simply accepted the defeat and paid the money, hoping to end this nightmare as soon as possible.
But the matter is not over after paying the fine. The crackdown by regulatory authorities is still continuing. The US Securities and Exchange Commission has filed 13 charges against Binance. Zhao Changpeng's suffering is still to come.
Zhao Changpeng pleaded guilty: from a fine to a 4-month prison sentence
After paying the fine, Zhao Changpeng got into trouble again. After Binance was fined, Zhao Changpeng was also involved in the US judicial process.
In 2024, he was sued for violating US anti-money laundering regulations by failing to prevent money laundering when managing Binance. Zhao Changpeng pleaded guilty to the charges and took responsibility.
He paid a huge fine of 53.1 billion yuan and was sentenced to four months in prison.
Why did Zhao Changpeng choose to plead guilty? In fact, Zhao Changpeng knew very well that pleading guilty was his only option.
On the one hand, if Binance is fined a huge amount and criminal charges are filed against it, its business may not be able to continue. If it keeps dragging on, the situation will only get worse.
On the other hand, if he pleaded guilty, the matter could be resolved sooner and he wouldn't have to spend so much time in the judicial process.
In addition, perhaps Zhao Changpeng wanted to plead guilty in exchange for a lighter sentence from the American judicial system. In this way, he would only need to stay in prison for a short period of time and then be able to return to a normal life.
This choice is indeed very pragmatic, but it also exposes his underestimation of legal and compliance issues.
But pleading guilty would be too costly for Zhao Changpeng. He lost the management and control of Binance, fell directly from the altar, and also lost a lot of reputation in the crypto market. But the law is the law, and it will never change because of one person's behavior.
Why is the United States so harsh?
The United States is so tough on Binance not just to punish Zhao Changpeng's personal behavior.
From a deeper perspective, the United States’ attitude towards cryptocurrencies reflects its determination to maintain the core of its global financial system.
As the maker of global financial rules, if the United States perceives that certain actions may endanger its own financial order, it will definitely take severe measures to respond.
Cryptocurrency, especially large platforms like Binance, has brought a huge impact on the traditional financial system, and at this time has also provided channels for illegal activities such as money laundering and terrorist financing.
Especially for the United States, a country controlled by capital, once the actions of a group or individual touch the interests of the capital behind it, it will inevitably face encirclement and suppression by the entire capital consortium.
It's not just Zhao Changpeng. It's the same no matter who does it. Although Zhao Changpeng has accumulated huge wealth through Binance, in front of the state machine, no matter how much wealth he has, it may vanish overnight.
Is it worth giving up Chinese nationality?
For Zhao Changpeng, the thing he regrets most is probably giving up his Chinese nationality.
In the past, he wanted to develop his own cryptocurrency empire globally, so he gave up his Chinese nationality, went to Canada to get a new identity, and often lived and did business in Singapore.
But who could have thought that when the United States wanted to fine him a large sum of money and sue him, Zhao Changpeng actually flew directly back to the United States, paid a high fine, and was willing to go to jail.
There was a lot of speculation about his actions. He could have stayed in the UAE to avoid the lawsuit, so why did he fly back to the United States and put himself in danger?
Zhao Changpeng is not stupid, he must have his own considerations behind his actions.
Perhaps he underestimated the power of American law and thought that paying a huge fine would buy his freedom. He even thought that the United States would exempt him from punishment.
Another possibility is that he wanted to settle the matter quickly by pleading guilty in order to protect Binance's business interests and prevent the company from suffering further consequences.
Regardless of the process, the ending was not very good anyway. The US court still sentenced Zhao Changpeng to four months in prison.
The young man who once stood at the top of the Krabi Arm Guard is now a prisoner.
Is it really worth it to end up like this?
In a sense, Zhao Changpeng's experience reflects the dilemma faced by businessmen in the context of globalization. On the one hand, they need to expand their business territory globally, but on the other hand, they must also face different legal environments and risks in different countries.
Zhao Changpeng's choice may represent the helplessness of many multinational entrepreneurs when faced with similar difficulties.
Cryptocurrency is untouchable
The Zhao Changpeng incident sounded the alarm for our country's cryptocurrency industry.
From the moment Bitcoin appeared, my country's policies have tended to be conservative. After all, as an emerging species, the risks are too high, and one could end up being liquidated if not careful.
However, the profits in these crypto markets are too high, so many entrepreneurs have turned their attention to overseas, hoping to find development opportunities in a market environment with looser regulation.
Zhao Changpeng has also become a living example that no matter where you are, laws and supervision are always there!
For domestic companies, this is a wake-up call: no matter where you do business, you must comply with local laws, regulations and regulatory requirements, and don't just think about making quick money.
The right way is to do business steadily and legally!
Conclusion
Zhao Changpeng’s highlight moment has come to an end, but the Bitcoin drama is still going on. No matter how strict the supervision is, the high risks and high returns will definitely attract some people.
But I still think that living every day down-to-earth is the serious thing. If you do your job well, you are already standing on the shoulders of the god of success!
