Backstage With CZ, the CEO who can not be stopped

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Cameras, flashlights, tweets – when Changpeng Zhao goes on stage these days, it seems like he follows a kind of mania.

Of course, perhaps it is to be expected when you are known all over the world only by two letters, but "CZ" has probably achieved something bigger in 2018 – a status of celebrity that is equaled by its weight as an entrepreneur.

On a stifling December day in Singapore, Zhao is ready to show why – he has a surprise that it is not as much on his sleeve as it is underneath. "I'll show it to the crowd later," he says, with a smile on his face, from ear to ear.

As they go on stage, the participants at the Forbes Asia Forum in Singapore have moved from a handful of bored businessmen, head down, with headphones, into an excited mass that it can almost be perceived going forward.

It is a testimony of Zhao's crossover appeal: many among the public are members of a financial institution that are (at least publicly) still rather skeptical, if not quite derisive of technology. On stage, however, the divisions fade away as Zhao raises her arm to unveil her first tattoo – a new logo of her Binance exchange.

The move goes to show the root of the CZ appeal; if sometimes it seems to escape an outlaw status, what makes it such an effective ambassador for the cryptic movement is that it exudes its fundamental beliefs so easily.

Come in, his smile says, the future is waiting for you.

But if Zhao has come to embody the current state of cryptocurrency – its unstoppable growth and renewed cultural appeal – it is also at the height of the industry with an oversized ambition. "I hope one day it can become as influential as Elon Musk," he told CoinDesk.

Behind the scenes, CZ is already showing signs of that kind of celebrity status, in which he puts at least a dozen selfie requests, all on condition that his right arm is held high. (Zhao would have continued to write an entire blog explaining how he got his new ink).

The post highlights another key component of Zhao's appeal, his ability to connect with people. This could be one of the reasons why he is also ready to reject the claims of being an extremist, or that his work in cryptocurrency is a political agenda, arguing that its appeal does not derive from any ideology, but from love for freedom.

Zhao says:

"I think we need the rules for society to work well, but at the same time, they are also very much driven by freedom, I think we can increase the level of freedom."

Money moves

However, if Zhao is well equipped to win people's hearts and minds, he is equally adept at capturing their dollars.

While Western media tend to propagate the rise of Coinbase, even their rise to millions of users is lukewarm compared to how, in just over 12 months, Binance switched from white paper to $ 15 million ICO to one exchange that sees billions of dollars in daily trading.

As of the end of 2018, Binance has eight business lines: Binance Exchange; Binance Labs; Binance Charity; Binance Academy, Binance Research; Information from Binance, Binance Launchpad and Trust Wallet, as well as a ninth, a decentralized exchange, ready for launch in January.

Not to mention Binance Coin (BNB), the almost $ 1 billion cryptocurrency network that the company uses as de facto currency for its exchange fees.

Impressive as the list could be, it is even more so considering that some – in particular, Binance Coin, as well as the encryption policy of the Binance Exchange alone – were radical at the time of their launch. Add up the number of companies that have followed Zhao's leadership, and it's easy to see why he is praised as a visionary.

Jehan Chu, co-founder and managing partner of Kenetic Capital, whose company has continued to invest in Binance, now believes it was a mistake, and this is largely due to Zhao's expertise in the company's expansion.

"What has worked very well is its ability to adapt to the evolving market and to invent the kind of innovations that the market did not even want," says Chu. "They were the first to invent an exchange token, I think it's the most impressive thing about CZ: his vision of simply trying different things, iterating and then executing."

There is also, of course, his impeccable timing. It is easy to forget that Zhao's rapid rise came in almost a two-year spell in a kind of exile, a period when he was said to be working on a new project, but where CoinDesk's emails were often not broadcast.

Zhao was, on his behalf, late after his departure from OKCoin, an exchange of cryptocurrencies based in China. Jack Liu, a former colleague of Zhao at OKCoin, now with Circle, shared a story about a man who sees him as a mentor who hired him in 2014.

"Product market fitness is its number one skill," says Liu. "CZ has become really good at absorbing everything he sees and learns and incorporates what he does".

In fact, Binance is neither the first crypto-cryptographic exchange nor is it about to become the first decentralized exchange. "But he's good at putting together the synthesis of his background, his team, with initiatives he has not been able to do on OKCoin," says Liu.

And part of the reason for his ability, according to Liu, is that CZ is "very much a person of people". "He has a great sense of humor … and is always just a bit like an intelligent donkey" just a bit early compared to the mainstream, but very easily recognizable. "says Liu.

However, what could be unique about Zhao is that it has always been awaited back. When he left OKCoin in 2015, CZ wrote an e-mail to CoinDesk, saying:

"I'm pretty sure I'll still be in the bitcoin space … I think we've entered a winter phase with the bitcoin industry, but I firmly believe it will pass."

In retrospect, he was right. The winter of 2015 has passed, and when spring emerged, it was ready, after refining and building exchange engines that were ready to serve an expanding demand.

Walk the line

However, the rapid rise of Binance has been welcomed with skepticism by those who believe that Zhao could move too fast, given the state of global regulation.

Get a report at the beginning of the year from the New York Attorney General's Office, which eventually reported Binance, along with two other exchanges, for investigations. (This in itself did not indicate any wrongdoing on behalf of Binance, although it undoubtedly raised suspicions).

At the time, regulators' inability to appease concerns about manipulative or abusive trade was cited, as well as a lack of clarity about companies operating in New York.

At the Consensus: Singapore in September, the appearance on the main stage of Zhao coincided with the release of the report, and on stage and behind the scenes, refused to comment on the investigation.

A fundamental criticism of Zhao, then, is that he was perhaps too willing to engage in regulatory arbitrage, shifting his exchange to the jurisdictions he believes will give his current global activity – he affirms that he operates in over 190 countries – the best chance to offer his Services.

For example, Binance left China, where it was initially based, after the country's central bank had banned encryption in September last year, and later moved operations to Tokyo. In March, however, the Japanese regulatory authority of the Financial Services Agency issued a warning letter that Binance operated in the country without a license.

Binance is now based in Malta, although Zhao has also made notable appearances with other regulators, including Bermuda and Uganda, which are definitely out of the financial mainstream.

However, others, like Chu, believe it could be a challenge for the company. "I think playing court bell is not a game, you can not play it for a long time," he says. Yet, Chu thinks that if anyone can find his way out of these problems, it's Zhao, adding:

"While no exchange can emerge to hire traders like the NYSE or the NASDAQ, I think that among all of them, CZ has the best chance, with the exception of the regulatory angle." I think it could turn out to be his Achilles heel . "

Zhao, for his part, rejects these statements, even if he seems to recognize how his prejudices could lead to these assumptions.

"I have a very worldly mentality, but of the countries in which I live, I follow the law to the letter, I never do anything inexperienced and I never put myself in this kind of risks," he says.

Later, he continues to describe his approach as more lukewarm than it may seem, noting how Binance left China because he did not "want the trouble".

"In countries that are not cryptic, we do not advertise, we do not do events, we do not make much noise," he says.

An intelligent shortcut

Others support the story of Zhao, and it is remarkable that this group includes at least one regulator.

Jason Hsu, a lawmaker who has become Taiwan's entrepreneur who is pushing for crypto-friendly laws on the island, was introduced to Zhao when the exchange was expanding at the start of this year, and within a week the two had a meeting to sit down.

At the last minute before their alleged private chat behind closed doors, the two even decided to make a live broadcast. "It was spontaneous, if we're both so involved in this new technology, why not take a position and show it publicly?" Said Hsu.

"I did not know CZ before the meeting," Hsu recalls. "But it turns out he's a simple entrepreneur with no bullshit".

Hsu says that Binance has yet to open a shop on the island, as Taiwan's financial institutions and regulatory authorities have adopted a conservative approach in the industry. However, his time with Zhao left with the impression that Zhao's strategy is more nuanced than simply jumping from jurisdiction to jurisdiction.

By comparing Binance with Coinbase, Liu says the latter still takes a rather traditional regulatory approach to Internet companies in the sense that it chooses to offer services based on the world's largest markets step by step, ie States first United, then Europe and the UK

"CZ does not think about which country is the biggest market and so I will create a team there, start with what the crypts need – a wallet and an exchange," says Liu. "He's building a world where, once users go to the blockchain, users are the same."

"He's like one of those smart people who like to take short cuts – no shortcuts to do something bad – but to be efficient," Liu adds, saying:

"For me, going to Uganda or Singapore first is a short cut to go first on regulated markets. … It's a first blockchain person."

Iron man

So, if others could see "CZ" as a kind of Robin Hood, how do you see it? It turns out that Zhao prefers comparisons with Tony Stark, the billionaire superhero of the Marvel comics fame.

"Tony Stark is very resourceful," says Zhao in explaining the comparison. "It builds a lot of things – it's about the technology behind it, all the tools it builds it uses to do good things."

In his eyes, he is simply trying to do the best he can, and if that means challenging the establishment in the process, this is just a byproduct of his mission.

"We should always give people more options to choose from – the more options there are, the better, people can choose to use a bank, and people can choose to use cryptography, we're not perfect, we're not saying Crypto is perfect." , He says.

However, Zhao is doing its best to promote the crypto ecosystem and to avoid banks whenever possible. During an interview, he states that "he has no more to do with the Fiat" – partly thanks to a team that manages his expenses – and that he pays for hotels and flights in cryptocurrency, when possible, even if with a prize.

It is a personal mission that has come to his staff, where he estimates that the "95%" of the Binance team obtains at least part of their salary in the crypt. (Since he does not manage cash, he says that the company works with a network of unlisted traders to pay for the fiat).

In this way, Zhao identifies himself as a HODLer, the enthusiasts of cryptocurrency who believe that, regardless of whether the market is up or down, the best investment strategy is simply to buy, wait and wait for the world to awake.

That apartment that sold in 2013 for just over $ 1 million, before putting the proceeds into bitcoins? He says he has not sold anyone, even after last year's run-up.

"In fact, I still have 100 percent of those coins because I do not really need them," he says. "I'm not very greedy, I have more than enough money than I need."

Other attributes of his, he says, have permeated the Binance team. Describes his predominant mantra as "being honest, being ethical, not bullshitting". However, there are differences between the superhero and his team of crypto-Avengers.

One of the most notable is that it does not encourage others in the company, with the exception of several co-founders and spokespersons, to be equally active on social media, citing security reasons. ("We do not encourage our people to be public, they have a very minimal social profile, it's basically a guideline we do," he says.

As such, he says that sometimes he feels his team does not get enough credit for the work they do in realizing his vision and translating it into action.

Opening the gate

So where does Crypto's Iron Man come from? And Binance's star will continue to increase?

An open question remains. First of all, it is not clear how the decline in the cryptocurrency market will have repercussions on Binance's business and if this puts it in a disadvantaged position compared to colleagues who operate with greater regulatory clarity and institutional clientele.

This, however, seems to be something that Zhao is trying to rectify while the exchange is working at the opening of a store in Singapore that would accept the fiat currency, a former company in one of the largest Asian economies.

"Fiat is still where all the money is … And we have to open that gate," he said at the CoinDesk Consensus event in Singapore in September.

For Zhao, therefore, Singapore is a major obstacle for Binance, as it still has to convince a bank to fully support its business. (In particular, Singapore does not currently regulate cryptocurrency trade, although it is close to passing such laws.)

And while the national regulators in the region remain open to blockchains and cryptocurrency, it is to be seen how exactly they will choose to see Binance and Zhao, both as a potential resource for the local economy and as a possible responsibility.

Also, if the blockchain is what allows CZ to be so successful in so many countries, the same technology could also allow others to build a Binance knockoff in one or two months in every other domain.

As Liu says:

"Just as the other trades could have been captured and Binance could not be followed, Binance could also be trapped regardless of how good the CZ is. The test will be whether it will be able to further decentralize its activities so that its personnel be what the next Binance possesses. "

Likewise, it is not clear how Zhao will adapt, because he says he wants to return to the industrial sectors that may be less attractive. For example, the company intends to restart Binance Launchpad in 2019, a listing service for entrepreneurs seeking to raise money through token sales, even if what the company claims is a more rigorous review process.

Whether or not the establishment chooses to embrace it, however, at least for now, it still has the support of the faithful of the cryptocurrency, and he, in turn, has embraced them at every step.

"Just because I'm not against the banks, this does not stop me from presenting other people with another option that could be seen as a competition for them," he says.

During a behind-the-scenes dinner after the Singapore event, Zhao ends the conversation by focusing on what could be the best and definitive way to summarize his ethos – his belief that those who believe in cryptography and who will help bring forward the technology to the mainstream, they will be rewarded.

Zhao concludes:

"It is interesting to note that it is true believers who make a lot more money".

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Original Art by CryptoKitties (@cryptokitties)

CoinDesk & Wolfie Zhao's photo