Changpeng Zhao, known worldwide by his nickname CZ, is the entrepreneur who revolutionized the cryptocurrency world by founding one of the world’s largest digital exchanges, Binance. Over the years, he has been an undisputed leader in the space, a visionary who has guided millions of investors into the digital economy. But in a dramatic twist of fate, CZ found himself at the center of a legal storm that turned his career upside down in November 2023, when he pleaded guilty in a settlement with the U.S. government, followed by a prison sentence. How did such an influential figure reach such a critical juncture? And how will these events impact his legacy in the cryptocurrency industry?

No matter how experienced you are with blockchain and cryptocurrencies, you’ve probably heard of Changpeng Zhao, better known by his initials “CZ.” The Chinese-Emirati-Canadian businessman is the founder of the Binance exchange. He owns at least a 70% stake in the exchange, even after stepping down as CEO of the exchange in November 2023.

Beginnings: Changpeng Zhao and the Founding Story of Binance

Before establishing himself as one of the heavyweights of the crypto ecosystem, and one of the richest people in the world, Changpeng Zhao had an eventful childhood.

Changpeng Zhao, known as CZ, was born on September 10, 1977 in coastal Jiangsu Province, north of Shanghai. His mother was a primary and secondary school teacher. His father balanced his academic studies with a teaching job while waiting to complete his doctorate. Due to this situation, Zhao spent his early years moving between campuses with his parents.

Like many intellectuals in China, Changping Zhao's father suffered during the Great Proletarian Cultural Revolution. With universities closed, many students, including his father, were forced to go to rural areas to learn about "real life" according to Chinese communist principles.

After this difficult experience, when he had the opportunity, his father decided to leave China. He was accepted into the University of British Columbia in Vancouver and traveled to Canada in 1984 to complete his studies. From the age of six to twelve, Changping rarely saw his father...

In 1989, after the government crackdown on the Tiananmen Square protests, the remaining Zhao family was forced to leave China. Zhang, his mother, and his sister were given temporary visas to travel to Vancouver, where they moved and never returned to China again.

As a teenager in Canada, Changpeng Zhao had to take on several odd jobs to help make ends meet, including working as a night guard at a service station and as a kitchen assistant at a McDonald's restaurant.

Discovering Technology and Starting a Career

After arriving in Canada, Changpeng Zhao had an experience that would change the course of his life. At the age of 13, his father spent a large sum of the family’s savings on a DTK Tech-1230c computer. It may have seemed like a costly decision at the time, but it marked the beginning of a profound relationship between CZ and the world of technology.

CZ’s father, a geophysicist and programmer, was highly skilled in mathematics and was fluent in programming languages ​​such as Fortran, Pascal, and C. As a result, CZ was exposed to the world of programming at an early age, and began learning programming in high school, where it quickly became his primary passion. He later chose to major in computer science when he enrolled at McGill University in Montreal, Quebec.

In his third year of college, Zhao landed an internship in Japan, working with a company that provided software solutions for the Tokyo Stock Exchange. It was his first experience using his programming skills to create trading software. But, as he later told Bloomberg in an interview, his love for fintech wasn’t initially driven by his interest:

“I didn’t know what fintech or financial trading systems were. What attracted me was that the job was in Tokyo. I quickly realized that there was a lot of money circulating in these systems, a huge amount of money. So I never left the field after that.”

After graduating from university, CZ worked for four years at Bloomberg Tradebook. There he developed a program for trading futures on Wall Street. His performance was recognized and appreciated by his colleagues, which helped him hold senior positions several times. He managed teams in the United States, England, and Japan.

By 2005, CZ decided to start his own business and returned to Shanghai to establish his first company, Fusion Systems. This provided high-frequency trading systems for professionals, marking the beginning of his entrepreneurial journey in the world of technology and trading.

The Turning Point: How Bitcoin Changed Changpeng Zhao's Life

In 2013, while still living in Shanghai, CZ was first introduced to Bitcoin during a poker session with friends. At that session, Bobby Lee, then CEO of BTC China (a now-defunct exchange), and Ron Cao, an institutional investor at Lightspeed Ventures and now the chairman of Sky9 Capital, tried to convince him to invest 10% of his money in Bitcoin, which was then worth less than $100.

Before making his decision, Zhao delved deeply into the Bitcoin whitepaper. He was quickly drawn to Satoshi Nakamoto’s vision of a decentralized, borderless currency. His quick realization of the many benefits of a currency that does not need intermediaries and transcends geographical boundaries was important for someone who travels a lot. He no longer needed to incur expensive money transfer costs with every trip.

After this research, CZ made a fateful decision to devote his life to cryptocurrencies. In December 2013, he resigned from his position at Fusion Systems and sold his apartment in Shanghai to buy 1,500 bitcoins. He revealed in November 2021 that he still had them, except for about 100 bitcoins he had spent over the years.

At that point, Zhao began following cryptocurrency events, which were rare at the time. In December 2013, he attended the Inside Bitcoins conference in Las Vegas, which brought together around 100 prominent figures in the industry. There, he met leading figures such as Vitalik Buterin, the founder of Ethereum, and Charlie Lee, the creator of Litecoin.

CZ then joined Blockchain.info (now Blockchain.com) as head of development, which provided services for exploring the Bitcoin and Ethereum blockchains. As the company’s third employee after founder Ben Reeves and CEO Nicholas Curry, Zhao gained significant experience and rubbed shoulders with other Bitcoin legends, such as Roger Ver, who became his friend.

Months later, CZ decided to look for a new challenge, realizing that his strength lay in developing trading tools. He joined OKCoin as CTO, but only lasted less than a year. By September 2015, he had founded his own company, BijieTech, which provided trading technology solutions in Asia.

From Idea to Empire: How Binance Became the World’s No. 1 Exchange Led by Changpeng Zhao

In 2017, Changpeng Zhao realized that cryptocurrency exchanges were suffering from a number of problems that limited their ability to provide effective service to users. The exchanges were slow to process transactions, offered an unsatisfactory user experience, and suffered from crashes every time the price of Bitcoin rose. Additionally, customer service was virtually nonexistent, and competitors only offered duplicates of existing systems without substantial improvements.

With this vision, and building on the technological expertise and resources he gained from his previous company BijieTech, CZ saw a golden opportunity to make a difference. He was confident in his ability to improve every aspect of the digital exchange experience. From speed and user experience to customer support and reduced fees. He also realized that the future of cryptocurrencies lay in adopting a pure cryptocurrency trading approach. This would make this technology more accessible to the world, especially on mobile devices.

In July 2017, Zhao decided to take the bold step of establishing his own exchange, leaving BijieTech behind. He took his best team with him and launched an Initial Coin Offering (ICO) to raise funds to start his new project. He managed to raise $15 million by selling 100 million BNB tokens at $0.15 each, which allowed him to realize his dream.

In a style reminiscent of tech pioneers like Steve Jobs and Mark Zuckerberg, Zhao didn’t focus on appearances or waste time choosing clothes. He always wore hoodies and T-shirts with the Binance logo, indicating his complete focus on the success of his new venture.

In just six months since its launch, Binance has outperformed all competitors to become the world’s number one exchange. This success has continued ever since, with Binance becoming a symbol of the hard work and innovation that has defined Changpeng Zhao throughout his career.

Binance in the Face of Crisis: How Zhao Overcame Obstacles to Become a Global Leader

It’s no coincidence that Binance maintains its strong position in this fast-paced market. Much of this success is due to the character of its founder, who is exceptionally calm under pressure. CZ embodies the calm leadership that is rarely seen in a volatile world like crypto, a quality that has made him an outstanding CEO.

Shortly after BNB was released, its price dropped below $0.10, causing it to lose a third of its value during a critical moment. This would have been enough to make any team hesitate, but Zhao and his team didn’t let the drop stop them. They continued to work hard on developing new features for the exchange, which helped BNB rebound.

Later, the Chinese government imposed a ban on ICO fundraising. This affected investors who participated in four projects through Binance. While the startups were unable to refund the money, Binance took it upon itself to compensate those affected with $6 million, which was a third of the company’s funds at the time.

Then in May 2019, Binance suffered a major security breach that resulted in the theft of 7,000 BTC. However, Zhao acted quickly with the Secure Asset Fund for Users (SAFU) to immediately compensate those affected. This action sent a clear message to users: Binance puts its customers’ interests first.

With his calm leadership and perseverance, Zhao has successfully transformed Binance into a leading exchange. With multiple features such as excellent user experience, low fees, a wide range of cryptocurrencies, and passive income generating solutions, Binance has become an indispensable destination for investors around the world.

Unlike other exchanges that have been ignoring user inquiries for long periods, Binance has invested heavily in customer service, handling two-thirds of the transaction volume of all centralized exchanges.

How Changpeng Zhao's Journey at Binance Ended

On November 21, 2023, Changpeng Zhao announced his resignation as CEO of Binance, as part of a settlement with the US Department of Justice (DOJ) to end legal proceedings against the exchange. The resignation came after a series of pressures began to take their toll on the company, with Binance seeing a number of its executives leave the company around the world throughout 2023.

As part of the settlement, Binance paid a $4.3 billion fine to the Department of Justice, an amount that allows the company to continue operating while committing to providing access to its internal documents to US authorities for five years to ensure future compliance.

Binance pleaded guilty to three major charges, while Changpeng Zhao agreed to a maximum 18-month prison sentence and a personal fine of $50 million. CZ is scheduled to stand trial on February 23, 2024, where he could face a lengthy prison sentence based on the charges.

Although Zhao pleaded guilty to several charges in Manhattan federal court, he retained a majority stake in Binance. However, US courts imposed a ban on him from operating or working at Binance for at least three years. Despite this settlement, the legal dispute between Binance and the US Securities and Exchange Commission (SEC), which is still suing the company, has not yet been resolved.

The main charges against Binance and CZ include violations of bank secrecy laws that occurred between 2017 and October 2022. Zhao and the company were accused of failing to implement an effective anti-money laundering program, as well as violations of U.S. economic sanctions. The Justice Department also noted that Binance concealed its international activities within the United States, and that Zhao was aware of these practices as the exchange listed U.S. customers’ holdings on its balance sheets.

In response to the allegations, Binance has put in place a comprehensive compliance program, aimed at improving its policies and ensuring full compliance with US laws. Additionally, the exchange was forced to permanently withdraw from the US, leaving its US subsidiary Binance.US to exclusively manage the market.

Back to life after prison

Changpeng Zhao (CZ) was released from Lompoc Detention Center II in California on September 27. The Binance founder and former CEO has completed his four-month sentence.

Later, the former Binance CEO appeared on the X platform, where he spoke at greater length to tell us more about his plans. First, he thanked those who supported him and shared his first impressions. The Emirati entrepreneur also revealed that he intends to spend some time growing a new project he introduced last spring: Giggle Academy. In fact, CZ expects this educational platform to be a big part of his life for years to come.

It is worth noting that he also faces a lifetime ban from serving as CEO of Binance. This was part of the plea agreement, but Changpeng Zhao retains his executive rights in the company as a major shareholder.

However, Changpeng Zhao is actually the richest person ever to serve time in a U.S. prison. Fortune reports a personal fortune of nearly $60 billion, making him the 25th richest man in the world.

The vision that leads Binance towards a borderless future

Much of Changpeng Zhao’s success in keeping Binance on track in the ever-changing crypto ecosystem is due to his lean organization within the company. Rather than centralizing decision-making, Zhao gives his employees the freedom to make decisions independently, without requiring his direct approval. This approach has made Binance flexible in its response to market fluctuations and rapid technological developments.

By the way, Zhao never wrote a single line of code for Binance. He was so busy traveling the world that he rarely had time to sit in front of a computer screen. The easiest way to keep up with him was via Twitter, his favorite social network.

CZ has long dreamed of Binance being completely decentralized, and he has even stated that his ultimate goal is for the company to operate completely independently, without any direction from him. This ambition may seem unusual, but it aligns with his larger vision: to promote financial freedom by promoting cryptocurrencies. He has no problem with Binance one day disappearing as an exchange if that’s part of achieving that vision.

As for his role as CEO, Zhao has been considering handing over the reins to someone else since 2021. In November 2023, Richard Teng was appointed to the position, reflecting Zhao’s willingness to step down from executive leadership to pursue his vision on a broader scale.

Despite being a billionaire, Zhao lives a modest lifestyle. He often appears in public wearing simple clothes such as shorts and sneakers, showing a disregard for the traditional trappings of capitalism.

While we may not know what the future holds for Changpeng Zhao, what is certain is that he has a lot to offer the world. With his passion for innovation and embracing change, Zhao will remain one of the most prominent figures to have left a significant mark on the cryptocurrency landscape, and he continues to shape the future of this ecosystem.

$BNB

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