"Fortune Magazine" Interview | Binance Founder Changpeng Zhao: Will Soon Disclose Headquarters Address

Zhao Changpeng revealed that he bought an apartment in Dubai last September and moved his family from Singapore there.

This article is authorized to be reprinted from BlockBeat, original article here.

• Original title: "He became as rich as Mark Zuckerberg virtually overnight. How Binance founder 'CZ' Zhao became a $74 billion man while moving fast and breaking things in crypto"
• Original source: Vivienne Walt, Fortune
• Original translation: Biscuit, Chain Catcher

At the trendiest hotel in London, the slender CZ, dressed in a dark blue suit and white shirt, appears unassuming to the waiter. So when he has breakfast with other billionaires, the waiter leads him to a secluded corner of the restaurant where the cryptocurrency super-billionaire remains low-key for the next hour.

If Mark Zuckerberg walked in for coffee, he would be recognized immediately by the waitstaff. Indeed, CZ is different from Zuckerberg, virtually unknown outside the crypto industry. Yet, the 44-year-old founder and CEO of Binance is as wealthy as Zuckerberg.

Bloomberg estimates CZ's net worth at a staggering $96 billion. Although this figure fluctuates greatly with the crypto market, dropping to $74 billion by late March, it still places him among the wealthiest individuals on the planet.

CZ seems puzzled by the idea that his wealth should impress others. "If they think my net worth is that high, let them be," CZ tells me. "It's a fictional valuation."

For those who know him, CZ stands at the top of an industry that could completely disrupt the economic landscape. By any technological measure, he has ascended at lightning speed. Since founding Binance in 2017, he has built it from scratch into the world's largest cryptocurrency exchange, with approximately 100 million users.

According to the company, Binance's trading volume far surpasses any other platform, reaching a staggering $34.1 trillion in the booming year of 2021, where the platform collects commissions from each transaction. Internal sources at Binance claim that based on trading volume and fees, as well as the expected growth of cryptocurrencies, the company is now valued at around $300 billion, nearly six times the market value of competitor Coinbase.

Thus, the fact of CZ as a hidden billionaire is also coming to light. Today, the approximately $2 trillion crypto asset market is entering the mainstream of the global economy. The most telling sign was on March 9th, when President Biden issued an executive order directing every government department in the U.S. to urgently draft proposals on integrating crypto technologies into the world's largest economy.

For crypto executives like CZ, Biden's order was the stamp of approval they had been waiting for, indicating a chance to shed all regulatory troubles. Binance has been accused of flouting rules and exploiting consumers to grow, hence facing significant regulatory risks.

In early March, on the eve of our London meeting, CZ attended a wine party with British government officials and lawmakers, presenting a positive corporate image to leaders of countries where Binance operations are currently prohibited.

Even CZ's attire has changed, as he has long been seen in sporty T-shirts or polos bearing the Binance logo. It's a sartorial rebellion signaling a move toward legitimacy. (CZ's only tattoo is a Binance logo on his right forearm)

For CZ, earning respect is not the only challenge. With digital assets becoming increasingly prevalent, more competitors are emerging, with traditional and emerging financial institutions entering the field, raising questions about whether Binance can maintain its dominance. People hope that the nature of cryptocurrencies can transition from speculation to investment, becoming something constructive for the world.

"People are investing in cryptocurrencies because it looks new and cool," CZ says over breakfast. But he adds, "It's like the internet 20 years ago: slow, e-commerce doesn't work, no social media."

CZ believes this will change, that the crypto industry will eventually alter several status quos. He is determined to have Binance lead the way in this transformation, partly because he holds a significant number of early Binance shares. (CZ and the company do not disclose how much of Binance he owns, but estimates go as high as 90%.)

In the first round of funding in February, Binance raised $200 million from Forbes, with CZ hoping to launch cryptocurrency products under that brand. "We're looking at every area: gaming, social media, e-commerce," he says. "If you take a business and combine it with cryptocurrencies, you'll find that cryptocurrencies provide stronger financial leverage."

All of this sounds incredible. For years, crypto assets have been on the fringes of the financial world for trading. Then came the boom, with millions at home trying to invest their savings to boost their side income.

People are easily drawn to stories of quick wealth in crypto (and Musk's tweets), and investors are flocking in. Traditional financial institutions are shifting from caution to welcome. For example, PayPal began accepting cryptocurrency payments in May last year, and Visa now issues credit cards linked to cryptocurrencies.

The rapid growth of cryptocurrencies has broken financial rules, opening up gray areas where startups can thrive. CZ profits by creating a simple business model. When he launched Binance in 2017, his idea was to create a crypto supermarket for the average person, whether they had $10 or millions to invest.

Five years on, Binance operates a market for 482 digital tokens and its own cryptocurrency BNB, facilitating trades with 82 fiat currencies. Binance also has 1.6 million users buying NFTs on its trading platform, digital versions of real-world unique works.

Bloomberg estimates that Binance's revenue more than doubled last year, rising from $5.5 billion in 2020 to around $20 billion in 2021, with the majority coming from trading fees. "Their success isn't coincidental," says Chris Brendler, senior equity analyst at investment service firm DA. "They have the best tech, the best platform, the best execution."

What Binance lacks are safeguards and checks on financial instruments, which may explain why CZ now wears a jacket instead of a T-shirt. "We are currently in communication with all regulatory bodies," he says, "we are addressing the issues we encountered."

How simple is Binance, really? A 15-year-old crypto investor from Paris says, "I heard about crypto when I was 11 or 12," Hadrien Giral-Ghattas tells me. Two years ago, Hadrien borrowed 500 euros from his parents, used his mother's information to register a Binance account, and invested the money in cryptocurrencies, including Bitcoin, which has since risen by nearly 700% in value.

He also spent 120 euros on a wallet, a secure storage disk to protect his crypto assets. Now, Hadrien no longer uses cash for pocket money, instead using a black Binance credit card (with his name on it), earning 2% cashback on purchases, a benefit not widely known in France. "The development in the crypto world is amazing," he says.

By Hadrien's age, CZ's life has undergone a radical transformation. He grew up in a rural village in Jiangsu Province, China. His father, a university teacher, was exiled to the countryside for being deemed bourgeois. "We had rationing," he says, "if you wanted to buy meat, you got a ticket to buy meat."

In 1989, CZ's father was pursuing a PhD in Vancouver. Seizing the chaotic moment, his mother took her two children to the Canadian embassy in Beijing. They lined up, circled the block several times, waited in shifts for 36 hours before finally obtaining visas to reunite the family.

Moving to Vancouver was a whole new world for 12-year-old CZ. "I had my first taste of fresh milk," CZ marvels. "High school was fantastic." He tasted the thrill of earning money for the first time, working at McDonald's for $3.50 an hour, and refereeing volleyball games for $12.60 an hour. He even worked overnight shifts at a Chevron gas station.

As a software developer, CZ worked in Tokyo and New York for years, where he was involved in developing Bloomberg trading software. He returned to China in 2013 and heard about Bitcoin while playing poker with friends. Acting on their advice, he sold his apartment in Shanghai and invested $1 million in cryptocurrencies.

A poker buddy and venture capitalist Daming Zhu recalls that when CZ started Binance, "none of us knew what he was doing. But he was very persistent." Zhu invested about 1 million RMB (approximately $157,000) in his friend's startup — "the best investment I've made."

At the time, Bitcoin transactions took days or even weeks to complete. "We shortened the response time, hoping for an hour," CZ reminisces. Individual and "retail" traders responded enthusiastically, and as cryptocurrencies surged, the site's usage skyrocketed (see graph below).

Financial technology analyst Brendler attributes Binance's rapid growth to its outstanding online infrastructure, features, and market liquidity. He believes CZ leveraged the unregulated nature of cryptocurrencies to "do as we please before rules are set." This includes rapidly introducing new technologies to the market without waiting for regulatory approval.

In contrast, Coinbase, a $40 billion U.S.-based company founded five years before Binance, often "negotiates" with regulators to maintain its dominance in the U.S., especially among institutional investors.

CZ is also willing to relocate Binance's headquarters, depending on the crypto-friendliness of the location. The HQ debate has long been a controversial topic as Binance employees are global, and the presence of a physical headquarters remains a point of contention.

When CZ founded the company in July 2017, the registered address was in Hong Kong. Weeks later, China banned cryptocurrency trading. CZ subsequently moved to Japan, then to Singapore; the holding company Binance Holdings Ltd. is currently registered in the Cayman Islands.

But CZ's nomadic journey may soon come to an end, with pressure from regulatory bodies being a significant factor.

Cryptocurrencies have long been a headache for the global financial police due to their borderless nature, detachment from fiat currencies, and lack of traditional banking services. Criminals often use cryptocurrencies in drug trades, ransom payments, and money laundering.

Amy Lynch, president of asset management consulting firm FrontLine Compliance in Rockville, Maryland, says Ponzi schemes are widespread, and "regulators weren't prepared for the market's rapid growth."

With regulatory bodies pressing on cryptocurrencies, many eyes have turned to Binance, and CZ has clashed with governments. Last year, the U.K. and Japan warned Binance that it could not offer trading services to their citizens without a permit. Thailand did the same and filed criminal charges against Binance. Currently, Binance is banned from advertising its business in these countries.

Binance has also come under scrutiny for its custodial products. In early 2021, it began offering so-called stock token trading, crypto assets linked to the value of traditional stocks, which drew ire from several countries' regulatory bodies.

Binance withdrew and delisted these tokens in July. In September, U.S. officials launched an insider trading investigation into Binance.US, investigating whether U.S. entities or employees profited from user data in trading orders.

A core accusation from many officials is Binance's lack of a fixed office address. For instance, the U.K. Financial Conduct Authority says the company's "global geographic distribution" makes it difficult to regulate. International arbitration lawyer Aija Lejniece in Paris believes CZ's frequent office address changes amount to "forum shopping" to operate in the most lenient regulatory jurisdictions.

Lejniece, a Binance user, experienced the platform crash in May 2020 due to extreme Bitcoin volatility, causing her to lose millions. She points out that Binance's terms of service are contentious, requiring arbitration in Hong Kong, which is highly inconvenient, saying, "I think CZ just feels cool." She also notes that users couldn't reach Binance customer service when there were outages—partly because Binance lacks a headquarters. (The platform's terms of service explicitly outline this risk due to the exponential growth of cryptocurrencies.)

Despite all the complaints and concerns, CZ and Binance's response boils down to: we're working on it. Last fall, after completing most of the public relations through Twitter, the company hired its first PR director, whose deputy told Fortune magazine that Binance is ready to "become a more licensed, regulated business."

CZ says that since last year, Binance has included hundreds of legal compliance advisors among approximately 5,000 employees. Among them is a former investigator from the U.S. Treasury Department to help Binance address concerns about money laundering and other criminal activities (another issue governments frequently focus on).

At breakfast, CZ says he has informed regulatory bodies in several countries that he will soon announce a "suitable headquarters address." In mid-March, Binance finally obtained the first virtual asset service provider license from Bahrain and Dubai, both of which have no income tax requirements.

Last September, CZ bought an apartment in Dubai and moved his family there from Singapore. "We're not hiding anywhere," CZ tells me, "in fact, we're involved everywhere."

When asked how it feels to have unfathomable wealth, CZ says he can't quite grasp it either. The pace of accumulating billions has exceeded his adaptability. "I went from an entrepreneur to someone with hundreds of billions," he points out, noting that four years ago, he bought this suit for around $300 and wears an Apple Watch, not luxury watches. Though one can try to trust his perspective, it's worth noting that the suite he stays in costs $2,000 per night.

Despite sounding somewhat hypocritical, CZ is also bewildered by certain highly priced digital assets, especially NFTs. When I express disbelief at investors spending millions on digital artworks, he says, "I think people might have lost their minds."

This perspective may help explain why CZ invested in Forbes, an opportunity to prove that crypto can have utility. CZ says the publication's crypto strategy may include selling articles as NFTs and rewarding subscribers with blockchain tokens.

"They may not even need an ad business anymore," he says. "If this works, guess what? All other media businesses will have to enter the crypto space." The publication will showcase the business potential of cryptocurrencies and serve as an example of Binance's investment strategy.

However, six weeks after investing in Forbes, CZ has yet to announce other crypto investment plans. It remains to be seen whether Forbes journalists will maintain their independence, as Binance previously sued the publication for a report questioning its business strategy.

Since his father recently passed away from leukemia, he has become more philosophical. "We should do everything we can to have a positive impact on society," he adds, noting that even for those with endless digital wealth, "life is fragile."