The Freedom Of Wealth
By Glen Watson, Photos of CZ By Sean Baylis| Well, It's hard to know where to begin when it comes to Binance – a startup cryptocurrency exchange platform launched in 2017 that found itself in unicorn territory very quickly. So let’s pick Malta, where Binance is being welcomed with open arms after attempts to set up offices elsewhere were thwarted basically by financial regulators issuing warnings, the slow pace of receiving official permission to operate in those countries, or being outright banned as in China.
“Welcome to #Malta @binance,” Malta’s Prime Minister Joseph Muscat tweeted in late March with a link to a Bloomberg article about the plan to set up the office in Malta. “We aim to be the global trailblazers in the regulation of blockchain-based businesses.”
This tweet was a pleasant surprise to Binance Founder and CEO Changpeng Zhao, better known as CZ. When we meet in Hong Kong for this interview in early April, he strolls into photographer Sean Baylis’ studio in Sheung Wan without any handlers or assistants. He’s wearing his trademark Binance black hoodie, black trousers and bright blue sneakers (he ran 6km that morning, and after the interview he took the MTR to Causeway Bay for lunch with a friend).
“Malta gives peace of mind to our users. Being in a very crypto-friendly place helps,” CZ says.
Early Days CZ is very amiable, quite chatty, and clearly very bright. Born in Jiangsu, his English is great thanks to living in Vancouver, Canada from the age of 12 and later attending McGill University in Montreal where he studied computer science and learned to code. An internship with “a sub-contractor of a sub-contractor” to the Tokyo Stock Exchange brought him to Japan, and introduced him to the world of finance.
His CV is impressive, and includes Head of Technology of Bloomberg Tradebook Futures, as well moving to Shanghai to set up Fusion Systems, which made high-frequency trading systems for brokers. When these systems ran into regulatory concerns in China, CZ moved on briefly to Blockchain.info and then OKCoin, where he worked with Binance Co-founder He Yi (she was OKCoin’s head of branding and marketing).
Heeeeeere’s Binance “Despite being less than a year old, Binance is now the largest cryptocurrency exchange platform in the world based on traded value,” according to a March 31 article on Blockonomi.com. “Such has been the rapid rise that Binance has experienced that its quarterly profits have increased from US$7.5 million to US$200 million. This is an astonishing increase of more than 2,700 percent and it is unprecedented in the history of the financial market. Binance is also reputed to be the fastest-growing FinTech unicorn in the world.”
When Binance held the ICO for Binance Coin (BNB) in July, it raised about US$15 million (or 10 cents per coin). In early April, BNB was trading above US$12 and the company is planning to launch a decentralized exchange this year.
“On the decentralized exchange we’ll have less control,” CZ says in a recent interview with Bloomberg. “More likely anybody can list any coin. That’s the philosophy of the decentralized exchange, it’s freedom of choice, freedom of investments. But with freedom there will be people who are scammers. That’s not something we can control.”
Also out of his control is the BNB price. He can go for days or weeks without checking. “I don’t know what the Binance coin price is,” he says. “Basically if there’s a significant change in price or event, someone internally will tell me in our chat group first and I’ll check the news.
“We don’t use WeChat anymore. We use everything else, though. Telegram, WhatsApp, Wire, Telegraph, Signal and there’s a couple of self-hosted ones like Rumble. It has very strong encryption.”
Keep It Simple
CZ is proud of Binance and what it has achieved, so far, but says all this talk about becoming the world’s fastest self-made billionaire isn’t really for him. He points out that Binance’s trading platform took more than 2.5 years to build from scratch, debug and crank up to handle the blazing speeds and huge volumes. He also doesn’t splash out on the expensive luxuries in life. He still wears an Apple Watch 2.
“I’m not a collector of Michelin stars,” he says, listing things like burgers and street food as his preferred menu options. He doesn’t seem to live in any one place, either. And when he flies, which is a lot these days, he only takes along a carry-on suitcase.
He’d rather talk at length about freedom, in finance and in life, and admits that not only has he been lucky, but he’s a big believer in luck and also making the world a better place. It helps to have a lot of money, though.
“Nobody knows about entrepreneurship in total. Everybody got lucky. I got very lucky and it kinda grew very quickly. If you asked me to do it all over again, I’m not sure we’d get the same result to be honest. Right time, right place. Luck is a huge part of it,” he says. “I don’t argue with luck.”
TheForbesEffect CZ, 41, recently made the cover of Forbes magazine, which he admits was a bit of a lucky break that has benefitted Binance.
“People no longer worry about whether we have money or not,” he says. “Now we don’t go out and find partnerships – all the guys want to talk to us and become partners with Binance, help us in some way, work with the government, give us some license, give us a bank account…
“So that made everybody come to us and now we have a lot to choose from. Before every time we talked with people, they didn’t know Binance or how big we are. So that helped with our credibility. It also came with a few negatives. A lot of articles say CZ went from zero to like one billion dollars in six months he made all the money. In China, there’s actually a lot of negative press. But I think everybody in the crypto space likes us.
“It also put us very high profile from a regulatory point of view. So suddenly a bunch of regulators are looking at us and we’re taking more pressure on that side.
“But overall, I think it’s very positive. Now we have access to a lot more partnerships and a lot more people are talking to us. For me personally, there’s also a little bit of a psychological change. Before I knew the team is kind of financially free, but it wasn’t clear how rich we were to be honest.
“But after getting on the cover of Forbes, we no longer worry about money at all.Your mentality is, ‘we are actually really rich’.”
Knocking Out Mayweather Besides the hundreds of thousands of users flocking to the Binance platform (more than 240,000 signed up in a one-hour period this year), there are also hundreds of companies with coins and tokens that want to be traded but must first pass through Binance’s strict listing process.
Even the ones already on the platform are reviewed, as is the case recently with the Centra Tech token (CTR) – promoted by celebrities such as Floyd Mayweather and DJ Khaled – that Binance is delisting after the US Securities and Exchanges Commission (SEC) charged the Owners of Centra Tech with fraud.
“After proactively reaching out to the Centra Tech team to address our concerns and conducting thorough reviews of our findings, we have decided to delist the CTR token and the CTR/BTC, CTR/ETH trading pairs from the Binance exchange,” Binance said in a statement in early April.
Binance removed all CTR pairings from its platform on April 8, but says it will continue to support withdrawals until May 5.
A few months prior, a phishing attempt was detected and Binance earned a lot of respect for its handling of the situation (that included offering a US$250,000 reward).
Working With Regulators Some might think that Binance is running from regulators, but in fact the opposite is true. CZ is very keen for the company to be transparent, and works with regulators in many countries to help them form rules that will protect customers and punish scammers.
For example, he and the Binance team worked with the Maltese government on a proposed bill about crypto businesses – which, luckily, led to Binance being welcomed to set up on the island when Japan’s regulators issued their warning in March.
CZ’s travel plans in April included Taiwan and then West Africa, where he’s hoping to land a deal similar to the Malta one. He doesn’t seem disappointed with Hong Kong’s relationship so far with Binance, but he’s not impressed either.
“Hong Kong is a test bed, a sandbox for China,” he says.
Making The World Better Even before the wealth, CZ wanted to help make the world a better place and encourages the company’s nearly 170 employees spread out around the globe to do the same.
Binance is beginning to invest in startups that share a similar philosophy, with US$20 million earmarked to be split with about 10-20 companies under the strict condition that they must not announce the investment from Binance until their products are ready to go on the market.
“Now, we don’t do things for making money. We do things to help the community better, help the customers, promote the freedom of investments, promote the freedom of assets. It’s the freedom we want to promote now.
“We believe that crypto is better for the human race. Just by spreading that, we’re helping everybody else. By doing that, we will continue to make a lot of money. Because if you’re doing something that helps everybody, and everybody agrees, you actually make more money than just trying to make more money.
“I never had a really luxurious lifestyle. I still don’t have it. My team doesn’t have it. But it was the realization that, I think for me, I was always trying to do something meaningful. Now my team gets it as well. It was the realization that we’re pretty rich, let’s do something that’s really meaningful. That makes them work really hard.”
Spreading The Freedom “It’s very simple,” CZ says. “We want to do everything that promotes the freedom of assets. Crypto has that freedom. Once we have this mission, do we want to do margins and futures? That doesn’t really help our mission. It doesn’t spread the freedom around. Initially we want to do that first, but now, we want to do DEX first.”
There are other things, like selecting good coins to list on Binance. “That’s very important. That helps spread the good coins around. Once you have that kind of mission, what you do falls in place. It becomes very clear. Once my team understands that, I don’t have to make all the decisions – they make the decisions. I don’t get involved in listing, my team lists the ones they want to list.”
Evolutionary “In the human race, the freedom of slavery – that’s physical freedom. That made the human race much better. Freedom of speech, press, data, the Internet… all of these things make human life better. We strongly believe the freedom of assets and investments will make the world a lot better,” CZ says.
“We’re not trying to overthrow anybody, we’re not against any country, company, or bank, or person. We’re just doing a little bit at a time to promote this. We’re not revolutionary, we’re evolutionary. We’re doing a lot of small things. We help one user at a time.”
Charity Fund Binance is starting up a charitable side to the company and has just hired someone to run it. CZ explains that it will by crypto-financed with Binance covering all of the admin costs so that 100% goes to the beneficiary. Binance is putting aside US$10 million to test it out, probably in one of the African countries first.
Advertising Bans Many social media sites and others around the world have banned cryptocurrency ads, particularly for ICOs. “I think it’s a good thing,” CZ says. “Crypto shouldn’t need advertising to work. We don’t do any paid advertising. It’s all word of mouth. With the ads removed, fewer people are getting scammed.
“There are too many ICO projects. People need to find the good ones, which will have followers, etc. Without all the advertising, the good projects will rise to the top. I don’t like them intervening, but short term the effects are very positive. I’m not worried about it at all.”
Doesn’t Do Much Coding Any More With Binance’s rapid growth and wealth, CZ is globe-trotting, the company is
in hiring mode and there are plenty of people offering to join the team.
“There are some exchanges that don’t operate well, or can do bad stuff. We do everything properly, and we are very transparent among the team. Once you do that, you don’t have to tell them to work. What else are you going to do? Everything else is less interesting. It’s part of your life.
“Binance Angels, those guys work really hard watching over Binance and protecting our community. They’re volunteers. They don’t get paid, but they’re early ICO investors so they’ve made a lot of money.We have a bunch of financially free, wealthy people doing volunteer work for us and nothing else.”
Prime Job Candidates “Number one, we look for somebody who believes in our mission, who believes in cryptocurrency or blockchain,” CZ says. “Number two, we look for people who are not too greedy or purely motivated about money. Then we look at technical and other skills. They also need to have a lot of integrity. The community is self-auditing, self-regulating. Luckily now, those people come to us. We attract them.
“We have a lot of interns and are getting more. The platform is much bigger, and there are a lot of little things they can do.”
Binance Labs The company’s blockchain technology incubator, Binance Labs, has done 3-4 projects. CZ just brought someone on from Google and Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers (KPCB) who just finished her MBA and will be the head of Binance Labs. It will make crypto investments, mostly in BNB.
“As soon as Binance backs a project, they’ll never have to worry about money again. If they want to do an ICO, we have an ICO platform. Every ICO we’ve done has raised US$20 million in less than 2 minutes. All of them, and that’s when our platform was much smaller.”
CZ believes the fund initially will invest US$1-2 million in 10-20 companies, and Binance will become limited partners in other funds. “Many funds out there wants to invest in Binance,” he says.
Looking Ahead CZ wants to expand Binance to be more of a platform, instead of just an exchange. “The fund is important to us,” he says. “We will invest in other worthwhile projects. We’ll invest in blockchain and AI, blockchain infrastructure, better wallets, faster blockchains, easier integrated payment systems. We want to lay the cables for this industry. We have the power, so we must take the responsibility to do that.
“We also want to establish healthy relationships with regulators, so I’m spending a lot of time talking to them around the world. As an industry, we still need a healthy relationship. I don’t believe any sort of conflicting relationship will be good. Luckily, there are countries that are very favorable to us, that want to have that dialogue. That’s very promising. In the next few years, we want to shape the very healthy regulatory framework.
“There’s a lot of luck involved. But we are in a very fast-growing industry. We are definitely riding the wave,” CZ says. “But we are also providing a lot of value. We do our core stuff.”