CZ and Binance: The Man Who Built Crypto's Biggest Empire

Morning folks, and welcome to today's episode called "CZ and Binance: The Man Who Built Crypto's Biggest Empire." This is a guy who grew up in a village in rural China with no running water. By his mid-forties, he was one of the wealthiest people on the planet — richer than Bill Gates — having built the world's largest crypto exchange from a $15 million crowdfund. Along the way he'd clash with regulators across the world, trigger the collapse of a rival's multi-billion dollar empire, plead guilty to federal crimes, serve time in a US prison, and walk out the other side with a presidential pardon and a net worth of $100 billion dollars. It's a cracking story — enjoy.

Changpeng Zhao — CZ as he's known — was born in 1977, just one year after the end of Mao's Cultural Revolution, a decade-long campaign that had destroyed the lives of China's educated class — professors, doctors, scientists, stripped of their positions and sent to the countryside for re-education. His father is one of them — a university physics professor. Which is why CZ grows up in Zhong Hu, a village in rural China with no running water or gas.

In 1989, after the Tiananmen Square crackdown, the family moved to Canada, living near the University of British Columbia, where his father completed a geophysics doctorate.

Money is always tight. His mother is working as a seamstress to make ends meet. Despite this, his father spends $7K Canadian dollars on an IBM computer and uses it to teach his son basic programming.

By the time he's fourteen, CZ is working at a gas station and then at a McDonald's, while also achieving academically — he comes tenth in Canada's national mathematics competition.

In 1995, CZ enrolled at McGill University in Montreal to study computer science. He flew very much under the radar — there's not much information on his college years.

After graduating, he lands a job in Tokyo building what traders call a matching engine — the software that automatically pairs buyers and sellers in the market and executes trades. Every millisecond matters. The faster the system, the more valuable it is to banks, hedge funds and trading firms.

CZ is obviously very good at what he does, because he next gets hired by Bloomberg in New York. He's promoted three times in under two years. In terms of what he was like back then, his boss at Bloomberg said that CZ was "a smart software technologist with excellent people skills," but added that he's "not the classic Wall Street asshole" and "not the classic technology sociopath."

And like every born entrepreneur, CZ is itching to go out on his own.

In late 2005, he left Bloomberg, relocated to Shanghai, and co-founded Fusion Systems to build high-frequency trading platforms for major brokerages. Fusion Systems got a reputation for building some of the fastest high-frequency trading systems, and while I wasn't able to get any actual revenue figures, we do know that CZ was able to afford a $1.1 million apartment in Shanghai — so business must be good.

But then in September 2013, everything changed for CZ when he meets a few guys at a poker game and they tell him about Bitcoin. For context, Bitcoin at this stage was just four years old. Each coin traded for around $140. Most investors dismissed it as a niche internet curiosity with little chance of challenging the traditional financial system — it was seen as a fringe experiment for libertarians, programmers and speculators.

At this poker game, CZ is told to put around ten percent of his net worth into Bitcoin. He went off and did some more research, downloaded a Bitcoin wallet, and this is a quote from him: "After the first bitcoin transaction, I was amazed. It was the same feeling as when I first used a water pump, when I first saw a lightbulb, and when I first sent and received an email. I knew right there and then: The blockchain is the new technology for money."

So he doesn't put in just 10% — he goes all in. He resigns from Fusion Systems, sells his Shanghai apartment, and puts all of his money into Bitcoin. There was a rally on Bitcoin during 2013, so by the time CZ invests it's at $600.

And look, just so you know where I stand on Bitcoin — over the years I've done a good bit of research on it. Someone close to me is a big believer in it. He's held onto his Bitcoin for many years, and so he has given me additional context as to why he believes in it so much. And I guess that's the thing about Bitcoin — it's a belief. You either believe it is the future of money or you don't.

Or you're still sitting on the fence, like me. I love the concept, but I worry about the damage bad actors have done — and could still do — to its long-term viability.

But one thing I will say is that I really like CZ's commitment. You have to admire someone who believes in something so much that they're willing to bet the farm on it.

Anyway, in February 2014, just a few months into his Bitcoin investment, disaster struck. Mt. Gox, the world's largest Bitcoin exchange and the platform through which most Bitcoin trading took place, collapsed after being hacked, losing 650,000 coins — note: they'd be worth about $40 billion today. For many people, this looked like the end of Bitcoin as it crashed to $200.

CZ's response is to hold his positions and not sell a single coin.

In mid-2014, CZ was recruited as CTO of OKCoin. At the time, it was one of China's leading crypto exchanges. Today it's known as OKX and is one of the biggest cryptocurrency trading platforms in the world — if anyone follows Formula 1, you'll see their logo on the McLaren cars.

This is where he meets He Yi, a former TV host who is brilliant at marketing and user growth. They become life partners and would eventually have three children together.

But CZ falls out with OKCoin's founder Star Xu when Xu tries to renegotiate CZ's 10% equity stake. As a result, CZ and eventually He Yi walked out.

But he doesn't go straight into crypto. He first starts a business in China that could best be described as a Shopify-type platform for high-frequency trading — essentially a white-label, ready-made piece of code that smaller trading firms could plug into and use to execute trades at lightning speed, without having to build the infrastructure themselves. It did very well for a few years until 2017, when the Chinese government launched a regulatory crackdown that put an end to CZ's business.

But CZ understands the software can be repurposed for the cryptocurrency market. And so in June 2017, he decided to launch a new digital exchange by raising $15 million in an Initial Coin Offering — an ICO. Think of an ICO as high-tech crowdfunding. Instead of going to Wall Street or the big VCs for cash, you publish a white paper — a public manifesto detailing your tech blueprint and economic vision. Anyone in the world can read it, and if they like it, they buy your new custom digital tokens, and this finances the launch.

CZ was initially going to call the company BitMart, but He Yi, the marketing expert, said that it sounded like a supermarket and suggested Binance — a blend of Binary and Finance. Good call.

On the 22nd of June 2017, CZ released the Binance whitepaper to the public. It details a five-round token sale targeting a hundred million BNB tokens — Binance's own cryptocurrency, which functioned like the exchange's native currency, giving holders discounted trading fees and a direct financial stake in Binance's future growth. The more Binance grew, the more valuable BNB became — so buying in early was effectively buying a piece of the exchange itself. Because it's a tiered sale designed to trigger maximum FOMO, the price starts at just ten cents and scales up with each round.

But before launch, his former boss at OKCoin, Star Xu, flooded Chinese social media channels and WeChat groups with rumours, claiming CZ is a fraud, that he has no real technical competence, and that Binance is just a "ghost or fraudulent exchange" designed to steal user funds. To save the project's credibility, He Yi leveraged her very large following in the Chinese crypto community. She publicly endorsed CZ, defended Binance in interviews and social media posts — and it worked.

All five rounds sell out in seconds.

And Binance takes off faster than anyone could have predicted. This is from a Forbes article in 2018: "Seven months ago Binance didn't exist. Since then, it has attracted 6 million users, making it the world's largest crypto exchange. Since its July initial coin offering, a Binance token BNB has soared from about 10 cents to $13, giving it a market capitalisation of $1.3 billion." And its revenues were remarkable — it had profits of $200 million by its second ever quarter.

So why, or how, did it manage to grow so quickly?

Part of the reason is the product. Simple enough for beginners, but with the speed, tools and analytics that experienced traders expect. At just 0.1 percent per transaction, its fees undercut almost every competitor.

Timing matters too. By 2017, crypto is booming. Millions of new investors are flooding in — Bitcoin, which CZ had bought at $600 in 2013, hits $20,000 by December 2017. Existing exchanges can't keep up. Some suffer outages. Others stop accepting new customers.

CZ doesn't have that problem. He's spent his entire career building trading infrastructure for professional firms — so Binance is fast, reliable, and built for massive volume.

There's something else. Binance isn't connecting crypto to the traditional banking system. Most competitors are drowning in compliance and regulatory headaches. CZ sidesteps all of it. Binance launches as a crypto-to-crypto exchange — own Bitcoin or Ethereum? You can start trading almost immediately. No bank account needed. That means Binance can onboard users from anywhere, fast. And it lists far more cryptocurrencies than most rivals.

So it's not one thing. It's the timing, the fees, the product, the borderless model — and a founder whose entire career prepared him to build exactly this.

But as everyone who has any inkling of crypto markets knows, there have been so many ups and downs. January 2018 began what was called the Crypto Winter, with Bitcoin losing 50% of its value and other cryptocurrencies losing up to 70% — this was due to a lot of factors, including bad actors, Wall Street shorting crypto, and increased regulation.

From Bloomberg, 2018: "Perhaps most worryingly for Binance — regulators around the world are clamping down on the Wild West environment that enabled its breakneck growth. The exchange's 'know-your-customer' policies are some of the industry's least rigorous. Users need only an email address to open Binance trading accounts. CZ keeps the locations of Binance's offices and servers secret — making it tough to determine which country has jurisdiction over the company."

Now, it's not surprising that a lot of Binance's customers don't want the sector heavily regulated — it makes perfect sense. Many of them are into crypto precisely because they believe it has the potential to disrupt the entire financial system, and the last thing they want is to be absorbed back into the status quo they were trying to escape. One Binance user, quoted in Bloomberg, put it simply: "The less regulation, the better. I'm confident in Binance's ability to secure its own platform."

The thing is — whether you like it or not, regulation is the reality. Some jurisdictions over-regulate, some under-regulate, you're never going to please everyone. But when something grows at the speed crypto grew, pulling in hundreds of millions of ordinary people's money, regulation is inevitable.

China didn't even try to regulate it — they just banned it. In September 2017, Beijing officially outlawed ICOs and domestic crypto exchanges. So CZ moved Binance to Japan, then to Malta. When Malta's rules became inconvenient, he moved again.

But it's in the United States where the real trouble begins. And just to give you a sense of how loosely Binance was operating at this point, here's an encrypted internal message from their own chief compliance officer, sent in 2017: "We are operating as a f**king unlicensed securities exchange in the USA, bro."

It gets worse. US prosecutors later alleged that Binance's internal compliance teams repeatedly warned senior management that terrorist groups, sanctioned entities and other illicit actors were using the platform. The government argued that Binance prioritised rapid growth over regulatory compliance.

So in what appeared to be a concession to US regulators, CZ launched Binance.US — a separate platform for American customers, who were now officially banned from the original exchange. On paper, a compliance move. In practice, it didn't have any impact, because any US customer could bypass the restriction by using a VPN. And court documents reveal that CZ knew this, and was actively encouraging it. In his own words: "We don't want to lose all the VIPs which actually contribute to quite a large number of volume... so ideally we would help them facilitate registering companies or moving the trading volume offshore in some way."

So Binance was telling regulators one thing and coaching its biggest clients to do the opposite.

And then something happened that would change everything — not just for Binance, but for the entire crypto industry. FTX collapsed.

For context, CZ and Sam Bankman-Fried, the FTX founder, first met in 2019 at a conference in Singapore. CZ's first impression of Bankman-Fried — who was fifteen years younger — was cautious but not unkind. CZ said Bankman-Fried was "a smart young kid." Binance took an early equity stake in FTX, estimated to be about $100 million, and FTX grew rapidly.

Bankman-Fried cultivated an image unlike anyone else in crypto. Where CZ was elusive, Bankman-Fried seemed to crave the spotlight — he was the guy in the shorts and the messy hair who testified before Congress, who donated hundreds of millions to political causes, who positioned himself as the responsible, legitimate face of this chaotic industry.

This of course would have put CZ and other crypto bosses on edge. As CZ would later observe: "I didn't mind his constant self-promotion, but it often invited regulatory scrutiny to industry players, though it never seemed to land on him."

CZ then heard that Bankman-Fried and his team were quietly running a whispering campaign to US officials, spreading xenophobic rumours that CZ was a tool of the Chinese government and a threat to national security. CZ was furious.

By mid-2021, with crypto at its peak — Bitcoin had hit $69,000, and Binance alone handled more than $34 trillion dollars in trading volume that year — CZ decided to cash out of FTX, selling its equity stake back for $2.1 billion, paid in a combination of stablecoins and FTT, FTX's own native token. That's important.

Then we get to 2022 — another crypto crash, which began with the $40 billion collapse of the Terra and Luna tokens, two cryptocurrencies that had been considered among the most promising in the entire market. There was widespread panic and bank runs across major crypto lenders. Bitcoin fell from $69,000 to $15,500 by November 2022 — over $2 trillion was wiped from the crypto market and many crypto companies were closing.

And then, also in early November 2022, the crypto publication CoinDesk published a story based on a leaked balance sheet that showed that Alameda Research — FTX's trading firm, supposedly a separate and independent entity from FTX — was propped up almost entirely by FTT, FTX's own token. The two companies were not separate at all. They were financially intertwined in a way that meant if FTT fell, both FTX and Alameda would collapse. And it got worse. FTX had been taking customer deposits and sending them to Alameda to fund its trading operations — trading operations that, it turned out, had gone very, very badly. There was an $8 billion hole in the books.

When this story broke, the market was unsettled but not yet panicking — mainly because of Bankman-Fried's reputation. Because of his public profile and his pronouncements, FTX was widely viewed as one of the safest, most stable businesses in crypto.

But everything changed on November 6th, 2022, when CZ posted a single tweet announcing that Binance would liquidate its entire FTT position — around $529 million dollars worth. And here is what he said: "We gave support before, but we won't pretend to make love after divorce. We are not against anyone. But we won't support people who lobby against other industry players behind their backs. Onwards."

In effect, the biggest exchange in the world, run by the man who had once backed FTX and knew it better than almost anyone, was dumping the token.

My take on this is that CZ's decision to do what he did was driven by a mixture of pragmatism and revenge — pragmatism because he needed to cash out his FTT before it became worthless, and revenge because he didn't need to publicise it. By doing so, he knew he would cause panic.

Six billion dollars in withdrawal requests flooded in over seventy-two hours. FTX didn't have the resources to cover it.

Bankman-Fried reached out to CZ directly asking for help. Remarkably — CZ agreed. Binance signed a non-binding letter of intent to acquire FTX. But after a quick due diligence process, CZ pulled out.

Bankman-Fried sent one final tweet directed at CZ. It read: "At some point I might have more to say about a particular sparring partner, so to speak. But you know, glass houses. So for now, all I'll say is: well played; you won."

Two days later, on November 11th, 2022, FTX filed for bankruptcy. Bankman-Fried was later sentenced to twenty-five years in prison for fraud.

More crucially for CZ and Binance, the fall of FTX did significant damage to the reputation of the entire industry and brought the full force of political and regulatory scrutiny down on top of it.

In 2021, the UK's regulator barred Binance's UK subsidiary and issued a public warning about the wider Binance Group. Then, as the pressure intensified through 2022 and 2023, CZ acknowledged that the old model was no longer sustainable, announcing that the company was ditching its nomadic structure: "We are making this pivot into a fully-regulated financial business."

However, this wasn't enough to save him or Binance from prosecution — and it's no wonder, when you read the incriminating internal texts and emails. I already mentioned some a few minutes ago from the chief compliance officer. Well, this guy seemed intent on getting the company into trouble, because here's another one from him from 2020, where he wrote the following when describing some of Binance's customers: "Like come on. They are here for crime." A colleague agreed, writing, "We see the bad, but we close 2 eyes."

In November 2023, CZ walked into a courtroom in Seattle and pleaded guilty to wilfully violating the Bank Secrecy Act, or the BSA. The judge detailed how the platform's system enabled billions to flow to ransomware attackers, cybercriminals, and terrorist networks.

CZ said in the courtroom: "I made mistakes, and I must take responsibility."

Binance paid $4.3 billion dollars in total criminal fines. CZ personally paid $50 million dollars to the DOJ, and a further $150 million as a civil penalty. Under the settlement, CZ is permanently barred from running or managing the exchange. The oversight structure Binance now operates under is intrusive.

Then in April 2024, at his sentencing, CZ said: "I failed... I deeply regret my failure, and I am sorry."

The judge sentenced him to four months in jail, and CZ became the richest person ever sent to a US prison. He also became the very first person to be sent to jail for violating the BSA.

Now I have a bit of a problem with this. When global banking giants like HSBC, JP Morgan or Goldman Sachs were caught violating the BSA and facilitating illicit money flows at a staggering scale, they paid massive fines — but no top executives went to federal prison.

I've talked about this many times previously, and I believe that top executives should face prison time when they break these laws — so in a way, yes, I think CZ deserved his sentence, but only if this now sets a precedent going forward. If it doesn't, then it's a case of: Wall Street does it, it's a cost of doing business. When crypto does it, it's a federal prison sentence. And that's not fair.

But the good news for CZ is that he eventually received a pardon from President Trump. And look, as you know, I don't like getting into politics on this show, but I need to lay out the facts on this pardon because they are pretty extraordinary, and you can make up your own mind.

In the months leading up to the pardon, Binance became closely involved with World Liberty Financial, the crypto venture backed by the Trump family. Binance provided the technical infrastructure to help launch USD1 — the Trump family's own stablecoin. A stablecoin, just to explain, is a cryptocurrency pegged to the dollar — so one USD1 always equals one dollar, making it a stable digital currency rather than a volatile one. And a stablecoin only becomes valuable when people actually use it and hold it, because the issuer takes those deposits and invests them in safe assets like US Treasuries, generating returns. So the more USD1 in circulation, the more money flows to the Trump family.

Then in May 2025, Binance negotiated to take a $2 billion investment from a UAE sovereign fund — and what's crucial here is that the investment wasn't paid in dollars, it was paid in USD1. That single transaction instantly made the Trump family's token USD1 one of the largest stablecoins in the world, and created reserves that Bloomberg estimated could generate roughly eighty million dollars a year in investment income — going directly to the Trumps.

Five months later, Trump signed a full and unconditional pardon for CZ.

In other words, just so that this is crystal clear: Binance helped build the product USD1 for the Trump family, then engineered a deal that made it enormously valuable — to the tune where the president's family stands to make tens of millions — and after the deal is signed, Trump pardons CZ. Those are the facts.

And even some of Trump's own supporters see it for what it is. Joe Lonsdale, the billionaire venture capitalist who co-founded Palantir and is a huge Trump supporter, wrote on X: "POTUS has been terribly advised on this; it makes it look like massive fraud is happening." Draw your own conclusions.

So, where are CZ and Binance now? Well, the company remains the undisputed king of crypto, handling more than a third of every crypto trade made anywhere in the world, and is almost nine times bigger than its closest rival. It has over 300 million registered users and annual revenue of between $16 and $17 billion dollars.

As for CZ himself — he's still barred from running Binance's day-to-day operations, so he spends his time investing in AI, biotech and robotics, advising foreign governments on digital asset frameworks, and building a free AI-driven education platform for underprivileged children. He still owns 90% of Binance and is the 17th richest person in the world with a $100 billion fortune.

As for CZ the man — he's not charismatic, he's not outgoing, and despite all the drama of the last few years, he himself isn't dramatic. In fact, even he says he's pretty boring. And I have to say, I quite like that about him.

Now yes, you could look at the compliance failures and argue that CZ prioritised growth over regulation. But I also think it's important to understand the mindset of someone who genuinely believes in cryptocurrency. Many early crypto believers saw it as a way to build an entirely new financial system, free from banks, governments and the regulations that came with them. So it's hardly surprising that many of them viewed regulation as something to resist rather than embrace.

In the end, I think CZ is an exceptionally smart technologist who had the right idea, built the right product and launched it at exactly the right time. He might not be the most fascinating character, but the story of Binance is fascinating.

And that brings us to listener emails, and this one comes from Luke, who'd love me to do a story on Andrew Left, the short seller who was recently convicted of securities fraud and is facing 25 years in jail. That is a fantastic suggestion and I will definitely do an episode on this within the next few weeks — thanks for the suggestion Luke, and for listening.

And remember, if you have any comments, corrections, or story ideas, email me at info@gbspod.com.

All the best, folks.