Is Binance’s CZ Becoming SBF 2.0?
One crypto king's fall is another king's rise
By: Zack Abrams
May 6, 2023
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Crypto is running out of heroes.
SBF, Do Kwon, Alex Mashinsky, and so many others have turned out to be false idols. Vitalik is brilliant, but he’s squarely focused on his own creation. Maybe Satoshi has only lasted this long as a paragon of the crypto ideal because nobody knows who he/she/they are.
Yet, crypto still has one kingpin standing: Changpeng Zhao, known as CZ, the head of the world’s largest crypto exchange, Binance. The company has only been bolstered by the collapse of its biggest rival, FTX, and does more daily volume than its next few competitors combined.
But it’s impossible to tell the story of how Binance got to that spot without telling the story of CZ — in many ways, they’re one and the same. But CZ’s tight grasp on his Binancial empire has some crypto investors worried that if CZ should fall, the rest of crypto might well be taken down with him.
The way Binance grew was no accident; CZ has deftly navigated his business through regulatory hurdles in crypto-resistant jurisdictions since its founding in 2017. But in a world where regulatory clarity continues to prove elusive, Binance’s “pirate ship,” as CZ once called it, may have rough seas ahead.
This March, the Commodities and Futures Trading Commission (CFTC) charged CZ, Binance, and its former Chief Compliance Officer Samuel Lim with several violations of US law. The complaint offers piercing insight into Binance’s operations and the dizzying complexity of its operations. According to the complaint, Binance has more than 120 entities registered in jurisdictions spanning the globe.
Despite the size of his empire, CZ, appears to be incredibly close to the daily functioning of Binance. The CFTC's complaint alleges he, “answers to no one but himself” since “Binance does not have a board of directors.” Similar alarms were raised about SBF and his control at FTX prior to his exchange's collapse. Nonetheless, CZ still oversees every part of his operation, even allegedly approving a “$60 expense related to office furniture in January 2021, a month in which Binance earned over $700 million in revenue.”
In this episode of Coinage, we break down the rise of Binance and CZ, Binance’s blockchain BNB, everything we learned from the CFTC’s complaint, and why CZ’s tight grip on power should make anyone in crypto uncomfortable. Check it out above.