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Bincance boss Changpeng Zhao: The savior

2022-11-25T14:56:30.607Z


The CEO of crypto exchange Binance brought down the empire of his rival Sam Bankman-Fried. In the midst of the crash, he now acts as an emergency helper. But many distrust the new ruler.


Enlarge image

Binance CEO

Changpeng Zhao

, dubbed CZ: "There will be pain as more fall"

Photo: Antonio Masiello/Getty Images

If you imagine the kingdom of the fallen crypto king

Sam Bankman-Fried

(30) as a house of cards, it quickly becomes clear who pulled out the bottom card and helped trigger the collapse:

Changpeng Zhao

(45), founder and head of the world's largest crypto exchange Binance, once partner and later bitter rival of Bankman-Fried.

The months-long dispute between the super-egos "SBF" and "CZ" culminated in a crypto market tremor in early November, which tore Bankman-Fried's crypto exchange FTX into bankruptcy and also cost Zhao more than 10 billion dollars.

But since then there has been a role reversal.

With the fall of the seemingly golden ruler Bankman-Fried, Zhao rose to become the new king - and he was still the dark knight.

Founded in 2017, his Binance platform is a penumbra that has grown at a staggering pace in this milieu.

To date, Binance is not regulated by financial regulators, on the contrary: regulators in the US and Europe even warn.

Zhao has more than 400 cryptocurrencies traded on his platform, more than three times that of listed US platform Coinbase.

In addition, Zhao offers extremely wild trading maneuvers with leverage and on margin: Anyone who wanted to spin a really big wheel with a lot of risk came into his kingdom.

This is how Binance became the largest crypto platform in the world,

So what is to be thought of the change on the crypto throne?

And how credible is the transformation of CZ, who railed against any regulation for years and now appears as the white knight of the crypto world?

Because the entrepreneur in the black T-shirt is not acting as selflessly as he is currently pretending to be.

Some observers even see him more as a robber than a knight.

A poisoned deal

SBF and CZ were initially linked by a partnership.

When Bankman-Fried founded his trading platform FTX in 2019, Zhao invested $100 million in the competitor.

Making the world happy with crypto deals and getting rich at the same time was the common mission.

But the tensions between the two up-and-coming billionaires intensified: while Bankman-Fried sought proximity to politics in Washington, CZ felt badly treated by the competitor.

However, Zhao, who himself lives in Dubai most of the time, has also done a lot for his reputation as the dark knight of the scene.

His company moved several times;

to this day it is unclear where the world market leader Binance actually has its headquarters.

The taunts between SBF and CZ have now been publicly held on Twitter.

In the summer of 2021, at the height of the boom, SBF had had enough and paid out its unloved shareholder.

The breakup was a bright deal for Zhao.

According to Reuters, the Chinese-Canadian Binance boss received around two billion dollars as a result.

SBF paid partly in cash, partly in FTX's own token FTT - and later regretted this deal bitterly.

"Well played, you won"

The finale of the feud is cinematic.

In early November, CZ announced on Twitter that it would withdraw and sell around $600 million worth of FTX tokens from the platform.

Such a public announcement is highly unusual in the financial world.

Whether intentional or not, it triggered a digital bank run on the FTX platform: within 72 hours, investors withdrew around $5 billion, FTX ran into acute liquidity problems, and the value of the FTT token collapsed.

For a fleeting moment, Zhao offered to take over FTX and save it from bankruptcy for the stumbling rival - and withdrew the helping hand shortly afterwards.

"We learned about irregularities and investigations at FTX," Zhao explained the withdrawal in a businesslike and sober manner.

"So: Hands off."

FTX went bankrupt a little later – but the conflict continued.

"One day I will tell more about my sparring partner," SBF threatened on Twitter after the crash.

"But I'm in a glass house, so all I can say now is: Well played, you won."

CZ reacted sharply: Only a "psychopath" could write such a tweet, he commented a little later at an investor conference in Dubai.

Someone whose house is on fire should focus on other things than tweeting blame.

"There was no master plan"

The coolly calculating CZ has stuck to this story to this day.

There was no "master plan" to massively expand your own empire in the midst of the crypto crash, Zhao stressed in an interview with the Bloomberg business service this week.

FTX went under through its own fault.

"The only thing I have to blame myself for is that I asked the critical questions about FTX way too late."

In fact, FTX's implosion is a consequence of its own transgressions.

Insolvency practitioner

John Ray III.

– Nicknamed “Pit Bull” – delivered a scathing testimony to platform FTX and closely affiliated hedge fund Alameda.

The lack of any control mechanisms is staggering, he said, according to court documents.

For many of the more than 130 insolvent companies in the empire, there were never any balance sheets or board meetings, and a group of inexperienced kids ran the empire.

In any case, in the short term, Zhao's fortune also suffered from the recent turmoil in the crypto world.

According to estimates by Forbes, only around $15 billion of the original $80 billion remains.

The sales of the trading giant Binance with cryptocurrencies and crypto derivatives, which according to "FT" amounted to almost 3 billion dollars in October, have also collapsed since then.

In the long term, however, should the crypto market not be irrevocably damaged, Zhao could benefit from the downfall: one of the fiercest rivals has finally disappeared.

CZ has an appetite for takeovers

Zhao currently has more power over the scene than ever before - and he's using it.

In an interview with Bloomberg, Zhao reaffirmed his interest in buying the insolvent crypto lender Voyager Digital - he had fought a bitter takeover battle for the company with Bankman-Fried at the time.

Crypto broker Genesis Global, which faces bankruptcy, is also on CZ's wish list.

A whale is a whale, even if all the fish in the ocean are shrinking at the same time, and the smaller fish are becoming savory bargains.

Zhao denies wanting to take advantage of the misery of others.

The main thing now is to stabilize the entire crypto market – and to support ailing companies, he told Bloomberg.

According to this logic, the overthrown Bankman Fried had also appeared in the past few months, now the former Dark Knight takes on the role of the white crypto knight - and likes himself in the shiny armor.

Appropriately, Zhang called for a kind of rescue fund (Industry Recovery Fund) to be set up as soon as possible, to which Binance wants to contribute up to one billion dollars.

The fund aims to allow the bigger players in the crypto market to prop up struggling companies: “Right now there are a lot of companies out there that are in trouble,” according to CZ.

It is important to survive "a few critical months".

He definitely expects further bankruptcies.

"Every time a player falls, it becomes painful," Zhao told Bloomberg.

"But the damage that comes from it is getting smaller from time to time."

And he leaves no doubt that Binance will be among the survivors.

"A Company Hunter Story"

However, critics do not believe CZ in this new role.

"The fact that Zhao sold all his FTX tokens in one go will turn out to be one of the biggest heists in the company's history,"

Jon de Wet

, head of investment strategy at asset manager Zerocap, told the Financial Times.

"This is a flawless corporate hunter story."

And Zhang already continued to ignite.

He also spread rumors against the listed US company Coinbase and its boss

Brian Armstrong

(39), one of the remaining major rivals after the end of FTX.

He tweeted doubts about the alleged amount of Bitcoin reserves at Coinbase.

Shortly thereafter, Zhao deleted the tweet and spoke of a "misunderstanding".

But he doesn't let the teasing go completely.

"As a public company, Coinbase certainly has audited finances," Zhao told Bloomberg.

"But we would also like to see this information on the blockchain. We want more transparency."

Is he a savior or a robber?

Former Binance employees attest to their boss's outstanding analytical skills, determination - and the unconditional will to continue growing at all costs.

Transparency and compliance, which CZ now demands at every opportunity, were seen as obstacles in this growth rally in the past, the "FT" reports.

CZ's flair for strategically important alliances is also legendary: When

Elon Musk

(51) felt compelled to buy Twitter, the Binance boss got involved with the manageable sum of 500 million dollars - and thus secured a short connection to new Twitter ruler.

Everyone in the industry should now be aware of the powerful weapon that tweets are in the hands of the new crypto knight.

CZ can use them to unseat other kings.

Source: spiegel

All news articles on 2022-11-25

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