CZ Interview: Headquarters to be made public soon, no longer offering equity trading, believes humans live in "matrix"

The founder of Binance, Changpeng Zhao (CZ), sat down for an interview with Decrypt, discussing Binance's latest developments, market trends, and his personal belief in the Simulation Theory. Three statements were highlighted: Binance no longer engaging in equity trading, Terra not representing the failure of algorithmic stablecoins, and an upcoming headquarters reveal, each of which will be covered in individual articles by Decrypt.

The content is compiled from Decrypt Podcast, the text has been rearranged and condensed. For a more detailed discussion, please refer to the link.

How did you get into the world of cryptocurrency?

I rarely talk about this myself, but I used to play poker with Bobby Lee, the founder of the Bitcoin exchange BTCC, and Ron Cao, former partner at Lightspeed Ventures, in Shanghai. Bobby Lee mentioned BTC back then, and my interest in it grew over time.

Related to Binance

Binance's expectations after five years

Binance's operations are no longer top-down but more community-driven. I have not decided exactly what a product should be but have set a broad direction: "Provide and create more tools for the public to easily access Web3, cryptocurrencies, and blockchain." We have BNB Chain, an exchange, a wallet, but I won't decide where to start; I am just focused on building more tools.

How do you view exchange competition?

When Binance sees everyone rushing, we slow down. We didn't get involved in naming sports arenas or sponsoring super cups. Being cautious during a bull market has allowed Binance to retain sufficient cash. So, I would say we are just getting started. Binance has signed with C Ronaldo and Khaby Lame, and we plan for recruitment, mergers, and assistance in the bear market if assistance is deemed necessary.

I like to act off-cycle and believe in investing during bear markets and being cautious during bull markets. This is my third bear market experience, and running a business makes me more conservative when everyone else is getting excited.

Market Commentary | CeFi Collapse, Assistance

Collapse of lending platforms

It's difficult to say who is good or bad; this involves many factors:

• Luck: During a market collapse, one platform may have cash reserves while another may not.
• Competition: My platform offers 2% APY, another offers 10%, users will flock to the higher rate.
• Decisions: Good and bad decisions.

When discussing assistance, it's hard to say; it's not black and white. There isn't a mathematical formula to determine whether assistance should be provided. It mainly depends on the team's health, product-market fit, feasibility of assistance, and subjective judgment.

Binance has looked into cases like Voyager and BlockFi. Clearly, we did not intervene later on. Not intervening does not mean that assisting these platforms is right or wrong. Perhaps a failed acquisition in one case might be accepted in another, or maybe the acquiring party has different business directions.

Binance doesn't deal with stock trading, focuses on Web3

Note: CZ's subsequent response was edited by Decrypt into a standalone article.

Some exchanges are considering returning to stock trading. Once again, there is no right or wrong, but Binance is a company focused entirely on Web3. We will not offer stock trading but are committed to creating more Web3 tools. In any case, it is a good thing for users if any platform receives assistance or is acquired.

Binance prefers straightforward trading cases: "How much profit? How many users?" rather than scenarios involving lending and assistance.

Note: At this point, the host mentioned CZ talking about the lending relationship between FTX and Voyager, and they all laughed. CZ continued:

I will never engage in such transactions. Like me investing in you, you lending me a bit of money. But, once again, there is no right or wrong. Maybe these operations are more suitable for FTX.

Algorithmic stablecoin collapse

The failure of a project like Terra does not mean the failure of algorithmic stablecoins. However, algorithmic stablecoins do have higher risks than fiat-backed stablecoins. This does not mean that fiat-backed stablecoins are entirely risk-free; it's just that they belong to different categories. For example, USDT has had cases where bank funds were frozen. Therefore, educating users to identify risks will be crucial in the future.

Binance Headquarters, Regulation

Still committed to decentralization? Or compromising by establishing a headquarters?

We have surrendered to regulation. Initially, we embraced decentralization and it worked well. We recruited globally, and the 24/7 nature of crypto trading aligns perfectly with different time zones worldwide. However, as you just mentioned, the first question regulators often throw at us is, "Where is your headquarters?"

It is reasonable because for nearly a century, regulatory bodies have defined and set regulations for the term "company." So, what is the best approach for the crypto industry? I think it is to provide regulators with a complete structure. Binance has started establishing physical offices and obtaining licenses worldwide. However, many engineers and customer service personnel still work remotely. I believe Binance is meeting both the demands of decentralization and regulation.

Why no mention of the United States? Are the regulations too strict?

It's hard to say if any country's regulations are particularly strict; the focus is different. The US is stricter on profit-generating products and futures, but more advanced and open in other aspects. Binance.US has obtained licenses in approximately 46 states and may be missing two or three. Although I haven't spent much time on Binance.US personally, they are performing well.

For cryptocurrency exchanges, the support of the US banking system is crucial. Platforms like Binance.US and Coinbase can directly interface with users' bank accounts through the ACH Agreement for electronic transfers. I remember Korea having a similar mechanism, whereas other countries do not have this level of bank integration.

So where is the headquarters?

We do have a global holding company entity. As for the location, we will announce it at an appropriate time.

This matter is simple, not as complex as it seems. It takes time because we have been communicating with regulators worldwide. We want to ensure that establishing the headquarters is problem-free rather than making hasty announcements that may need revisions. Therefore, we are more cautious about it, but Binance's office locations in various countries are entirely public.

CZ's Simulation Theory

Tell us about your simulation environment theory

I do believe that we live in a simulation, but even so, I think work and life hold significant meaning for us, and we must take them seriously.

In my simulated environment, some things are pre-programmed and unchangeable; some are random, and there are also elements of luck. I consider myself extremely lucky. How else could I have such good fortune if I were not in a virtual environment? I am very grateful for this, so I must strive to do my best in this simulated environment.

Who created this simulation environment?

That's the point. We don't know who created this virtual environment. It could be created by us, where we die and resurrect repeatedly, or it could be created by beings in higher dimensions.

Just like Super Mario cannot talk to us when he dies. Therefore, we cannot know who the creator is. That's the beauty of it. If we knew we were in a certain virtual environment, it would lose its meaning, and many things would no longer matter to us.

Because we don't know, it makes this virtual environment more meaningful. I still take work seriously and do not consider myself a very important individual.