Changpeng Zhao and Binance: The Rise and Fall of the Crypto King

2023-06-22 08:22:11
The BBC News World editorial staff

2 hours ago

image copyrightGetty Images

image caption,

Changpeng Zhao, founder of Binance, is accused of participating in a “vast network of deception”.

Changpeng Zhao rose to prominence when one of the world’s biggest cryptocurrency scandals broke last year.

The founder of Binance, the world’s largest digital currency platform, made headlines in November 2022, following announcing that he was considering buying rival FTX, as the latter was collapsing.

Quickly, Zhao changed his mind and watched his competitor bleed out, dragging the rest of the cryptocurrencies into a dizzying fall whose traces still linger today.

Also read on BBC Africa:

FTX eventually went bankrupt and its founder, Sam Bankman-Fried, was indicted by the American courts. This is how following the collapse of FTX, Zhao became the new “king of crypto”.

But a few months later, US authorities filed a complaint once morest the company he runs, accusing it of operating illegally in the country and violating numerous financial laws.

Attempting to navigate troubled waters, Binance continued to operate smoothly until early June 2023, when authorities once more charged the company and its founder.

This time, the Securities and Exchange Commission (SEC) sued the company and Zhao for violating national investment laws.

image copyrightGetty Images

image caption,

Binance is the largest cryptocurrency platform in the world.

“We assert that Zhao and Binance entities have engaged in a wide web of scams, conflicts of interest, failure to disclose…” SEC Chairman Gary Gensler said.

Zhao dismissed the allegations on Twitter and said his company had not yet become aware of the accusations.

“My mother and I left China”

Known in the industry as Changpeng “CZ” Zhao, the businessman was born in 1977 in the Chinese province of Jiangsu.

The son of teacher parents, Zhao recounted, in a Binance blog post, the problems his family faced in China in the 1980s and how he fled the country at the age of 12 following the massacre of China. Tiananmen Square.

image copyrightGetty Images

image caption,

Zhao was born in Jiangsu Province, China in 1977.

“On August 6, 1989, my mother and I left China and traveled thousands of miles to Canada. For those familiar with Chinese history, this is two months following the events of June 4, 1989” , writes Zhao.

“I remember the line in front of the Canadian Embassy lasted three days, he commented on the blog. It changed my life forever and opened up endless possibilities for me.”

Zhao spent his teenage years in Vancouver, where he held various jobs, including at McDonald’s as a burger cook.

He then studied computer science at McGill University in Montreal, then completed an internship at the Tokyo Stock Exchange before working for Bloomberg Tradebook in New York.

A few years later, Zhao returned to China to work at several tech companies and founded Binance in 2017.

“A vast network of scams”

But the Chinese government bans cryptocurrency platforms from operating in the country, prompting Zhao to emigrate once more, consolidating his business in other latitudes.

Binance has risen to the big leagues and quickly become the largest cryptocurrency buying and selling platform in the world.

However, trouble soon followed. UK authorities banned Binance’s activities last year, while in the US the first legal investigation was opened once morest it for alleged illegal operations in the country.

The latest is the lawsuit filed Monday, June 5, 2023 in federal court in Washington.

image copyrightGetty Images

image caption,

Zhao says he hasn’t seen the charges yet.

The SEC accuses the company and its founder of mishandling user funds and lying to investors and regulators, among other alleged improprieties.

According to the prosecution, the company ignored US securities laws and made billions of dollars in exchange for exposing its clients’ assets to “significant risk”.

US lawsuit also claims Binance and Zhao secretly controlled client assets, allowing them to mix and embezzle funds, and that the company created separate US entities “as part of an elaborate scheme to evade laws U.S. Federal Securities Regimes.

US authorities claim that from September 2019 until at least June 2022, Sigma Chain, a trading company owned and controlled by Zhao, carried out transactions that artificially inflated the trading volume of cryptoasset securities on the Binance platform.

“The public should be wary of investing their hard-earned assets in these illegal platforms,” ​​said SEC Chairman Gary Gensler.

1687431845
#Changpeng #Zhao #billionaire #accused #created #scam #network #United #States