Of course, that’s perhaps to be expected when you’re known to the world over by just two letters, but “CZ” has arguably achieved something greater in 2018 — a celebrity status that’s equaled by his clout as an entrepreneur.
On a sweltering December day in Singapore, Zhao is quick to show why — he has a surprise that’s not so much up his sleeve as under it. “I’m gonna show this to the crowd later,” he says, grin on his face, ear-to-ear.
By the time he takes the stage, the attendees at Forbes Asia Forum in Singapore have shifted from a scattering of somewhat bored businesspeople, some heads down, headphones in, into an excited mass that can almost be felt moving forward.
It’s a testament to Zhao’s crossover appeal — many in the audience are members of a financial establishment that are (at least publicly) still somewhat skeptical, if not derisive of the technology. Onstage, however, those divides melt away as Zhao raises his arm to unveil his first tattoo — a newly minted logo of his exchange Binance.
The move goes to show the root of CZ’s appeal; if he sometimes seems to skirt an outlaw status, what makes him such an effective ambassador for the crypto movement is that he exudes its core beliefs so effortlessly.
Come on in, his smile says, the future is waiting.
But if Zhao has come to embody the current state of cryptocurrency – its runaway growth and newfound cultural appeal – he also matches the industry with an outsized ambition. “I hope someday I can become as influential as Elon Musk,” he tells CoinDesk.
Backstage later, CZ is already showing signs of that kind of celebrity status, where he fields at least a dozen requests for selfies, all under the condition his right arm is held high. (Zhao would go on to write an entire blog explaining how he talked himself into getting his new ink.)
The post spotlights another key component to Zhao’s charm, his ability to connect with people. That might be one reason he’s also quick to push back on assertions that he is an extremist, or that his work in cryptocurrency represents a political agenda, arguing himself that his appeal stems not from any ideology, but from a love of freedom.
“I do think we need rules for society to function well. But at the same time, I’m also very freedom driven. I believe we can increase the level of freedom.”
Still, if Zhao is well-equipped at winning people’s hearts and minds, he’s equally adept at capturing their dollars.
While Western media outlets tend to tout the ascent of Coinbase, even their rise to millions of users is tepid compared to how, in just over 12 months, Binance has gone from white paper to $15 million ICO to an exchange that sees billions of dollars in trading daily.
As of the end of 2018, Binance has eight lines of business – Binance Exchange; Binance Labs; Binance Charity; Binance Academy, Binance Research; Binance Info, Binance Launchpad and Trust Wallet, as well as a ninth, a decentralized exchange, set for launch in January.
That’s not to mention Binance Coin (BNB), the nearly $1 billion cryptocurrency network that the company uses as a de-facto currency for its exchange fees.
Impressive as the list may be, it’s even more so when you consider some – in particular, Binance Coin, as well as Binance Exchange’s crypto-only trading policy – were radical at the time of their launch. Add up the number of businesses that have since followed Zhao’s lead, and it’s easy to see why he is lauded as a visionary.
Jehan Chu, co-founder and managing partner at Kenetic Capital, whose firm passed on investing in Binance, now believes that was a mistake, and that’s largely because of Zhao’s competencies in expanding the company.
“What’s worked really well is his ability to adapt to the changing market and come up with the type of innovations that the market didn’t even know that they want it,” Chu says. “They were the first to come up with an exchange token. I think that’s what’s most impressive about CZ: his vision to just try different things, iterate and then execute.”
There’s also, of course, his impeccable timing. It’s easy to forget Zhao’s swift ascent came after nearly two years in a kind of exile, a period in which he was rumored to be working on a new project, but in which emails from CoinDesk often went unreturned.
Zhao was, by his own account, laying low following a departure from OKCoin, a China-based cryptocurrency exchange. Jack Liu, a former colleague of Zhao’s at OKCoin, now with Circle, shared a recount of the man who he sees as a mentor that hired him in 2014.
“Product-market fit is his number one skill,” Liu says. “CZ has gotten to be really good at absorbing whatever he’s seeing and learning, and incorporating into what he does.”
Indeed, Binance is neither the first crypto-to-crypto exchange, nor is it going to become the first decentralized exchange. “But he’s good at putting together synthesis of his background, his team, with initiatives he wasn’t able to execute at OKCoin,” Liu says.
And part of the reason for his ability, according to Liu, is that CZ is “very much a people person.” “He has a great sense of humor … and is always just a little bit of like a ‘smart-ass,’ just a little bit ahead of the mainstream, but very relatable.” Liu says.
Still, what might be unique about Zhao is that he was always expected back. When he left OKCoin in 2015, CZ wrote an email to CoinDesk, saying:
“I am pretty sure I will still be in the bitcoin space. I think we have entered a winter phase with the bitcoin industry, but I strongly believe it will pass.”
In retrospect, he was right. The 2015 winter did pass, and when spring emerged, he was ready, having refined and built exchange engines that were ready to serve an upswell in demand.
Walk the line
Still, Binance’s meteoric rise has been greeted with skepticism by those who feel Zhao might be moving too fast given the state of global regulation.
Take a report earlier this year by the New York Attorney General’s office, which ultimately referred Binance, along with two other exchanges, for investigation. (This in and of itself didn’t indicate any wrongdoing on Binance’s behalf, though it undoubtedly raised suspicion).
Cited at the time was the inability of regulators to assuage concerns over manipulative or abusive trading, as well as a lack of clarity over whether the firms were operating in New York.
At Consensus: Singapore in September, Zhao’s main stage appearance coincided with the release of the report, and onstage and backstage, he declined to comment on the inquiry.
A core criticism of Zhao, then, is that he’s been perhaps too willing to engage in regulatory arbitrage, moving his exchange to jurisdictions he believes will give his now global business – he says it operates in over 190 countries – the best chance to offer its services.
For example, Binance left China, where it was initially based, after the country’s central bank banned crypto trading in September last year, and it later moved operations to Tokyo. Then in March, however, the Japanese regulator the Financial Services Agency issued a warning letter that Binance was operating in the country without a license.
Binance is now based in Malta, though Zhao has also made notable appearances with other regulators, including Bermuda and Uganda, that are decidedly outside the financial mainstream.
However, others, like Chu, believe that could be a challenge for the company. “I think playing jurisdictional hopscotch is not a game. You can’t play it for very long,” he says. Yet still, Chu thinks that if anyone can find his way out of these issues, it’s Zhao, adding:
“While no exchange may emerge to take on incumbents like the NYSE or NASDAQ, I think out of all of them, CZ has the best chance, with the exception of the regulatory angle. I think that could prove to be his Achilles’ heel.”
Zhao, for his part, pushes back on these claims, even as he seems to acknowledge how his biases might lead to these assumptions.
“I have a very worldly mentality, but of the countries I live in, I follow the law to the letter. I never do anything dodgy and I never put myself into those kinds of risks,” he says.
Later on, he continues to describe his approach as more tepid than it may appear, noting how Binance left China because it didn’t “want the trouble.”
“In countries that are not crypto friendly, we don’t do any advertising, we don’t do any events, we don’t make a lot of noise,” he says.
A smart shortcut
Others back up Zhao’s story, and it’s notable that this group includes at least one regulator.
Jason Hsu, an entrepreneur-turned legislator in Taiwan who is pushing for crypto-friendly laws on the island, got introduced to Zhao when the exchange was on an expansion early this year, and within a week, the two had a sit-down meeting.
At the very last minute before their supposedly close-door private chat, the two even decided to make it a live broadcast. “That was spontaneous. If we are both so committed to this new technology, why not make a stance and show it publicly?” Hsu said.
“I didn’t know CZ before the meeting,” Hsu recalls. “But it turns out he’s a straightforward and no bullshit entrepreneur.”
Hsu says Binance is still yet to open up a shop on the island, given that financial institutions and regulators in Taiwan had taken a conservative approach to the industry. However, his time with Zhao has left with the impression that Zhao’s strategy is more nuanced than simply hopping from jurisdiction to jurisdiction.
In comparing Binance with Coinbase, Liu says the latter still takes a rather traditional internet company approach to regulation in the sense that it chooses to offer services based on the world’s largest markets step by step, i.e. first the U.S., then the Europe and the U.K.
“CZ doesn’t think about which country is the biggest market and therefore I’m gonna set up a team there. He starts with what crypto needs – a wallet and an exchange.” Liu says. “He’s building for a world where once the users go onto the blockchain, the users are the same.”
“He’s like one of those smart people that enjoy taking shortcuts – not shortcuts to do something bad – but to be efficient,” Liu adds, stating:
“To me, going to Uganda or Singapore first is a shortcut from going towards the regulated markets first. … He’s a blockchain-first person.”
So, if others may see ‘CZ’ as a kind of Robin Hood, how does he see himself? It turns out, Zhao prefers comparisons to Tony Stark, the billionaire superhero of Marvel comics fame.
“Tony Stark is very resourceful,” Zhao says in explanation of the comparison. “He builds a lot of things. It’s about technology behind, all the tools he builds that he uses to do good things.”
In his eyes, he’s simply trying to do as much good as he can, and if that means challenging the establishment in the process, that’s just a byproduct of his mission.
“We should always provide people with more options to choose. The more options there are, the better. People can choose to use a bank and people can choose to use crypto. We are not perfect either, we are not saying crypto is perfect,” he says.
Though, Zhao is doing his best to further the crypto ecosystem and to avoid banks when possible. In interview, he claims he “doesn’t have to deal with fiat at all” anymore – partially thanks to a team handling his expenses – and that he pays for hotels and flights in cryptocurrency whenever possible – even if with a premium.
It’s a personal mission that has trickled down to his staff as well, where he estimates that “95 percent” of the Binance team gets at least part of their salary in crypto. (As it doesn’t handle cash, he says the company works with a network of over-the-counter traders to pay out fiat).
In this way, Zhao identifies as a HODLer, the cryptocurrency enthusiasts who believe that, no matter whether the market is up or down, the best investment strategy is simply to buy, hold and wait for the world to wake up to the asset class.
That apartment he sold in 2013 for just a little over $1 million, before putting the proceeds into bitcoin? He says he hasn’t sold any, even after last year’s run-up.
“Actually, I still have 100 percent of those coins because I don’t 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 through the Binance team. He describes his overriding mantra as “be fair, be ethical, don’t do crazy shit.” Still, there are differences between the superhero and his team of crypto-Avengers.
One of the most notable is he doesn’t encourage others at the company, except several co-founders and spokespersons, to be as active on social media, citing security reasons. (“We don’t 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 he sometimes feels his team doesn’t get enough credit for the work they do in carrying out his vision and translating it into action.
Opening the gate
So, where does crypto’s Iron Man go from here? And will Binance’s star continue to rise?
That remains an open question. For one, it’s unclear how the decline of the cryptocurrency market so far will impact Binance’s business, and whether that will put it at a disadvantage against peers operating with more regulatory clarity and institutional clientele.
That, however, appears to be something Zhao is looking to rectify as the exchange is working on opening a shop in Singapore that would accept fiat currency, a company first in one of the largest Asian economies.
“Fiat is still where all the money is in. … And we’ve got to open that gate,” he said at CoinDesk’s Consensus Singapore event in September.
To Zhao, then, Singapore is a major hurdle for Binance, as it still needs to convince a bank to fully back its operation. (Notably, Singapore does not currently regulate cryptocurrency exchanges, though it is close to passing such laws.)
And while domestic regulators in the region remain open to blockchains and cryptocurrency, it’s to be seen how exactly they’ll choose to see Binance and Zhao, whether as a potential asset for the local economy or a possible liability.
And besides, if blockchain is what allows CZ to become so successful so quickly in so many countries, the same technology could, too, allow others to build a Binance knockoff in one or two months at every other domain.
As Liu puts it:
“Just like other exchanges might have been caught napping and couldn’t follow Binance, Binance may get caught napping too no matter how good CZ is. The test will be whether he can decentralize his businesses even further so that his own staff are the ones that own the next Binances.”
So, too, it’s unclear how Zhao will adjust, as he says he wants to wade back into sectors of the industry that may prove less palatable. For instance, the firm intends to reboot Binance Launchpad in 2019, a listing service for entrepreneurs looking to raise funding via token sales, albeit with what the company claims is a more rigorous review process.
Whether or not the establishment chooses to embrace him, though, for now at least, he still has the backing of the cryptocurrency faithful, and he, in turn, has embraced them at every step.
“Just because I’m not against banks, that does not prevent me from presenting other people another option that could be potentially viewed as a competition to them,” he says.
At a backstage dinner party following the Singapore event, Zhao ends the conversation by focusing on what might be the final and best way to summarize his ethos – his belief that those who believe in crypto, and who help advance the technology toward mainstream, will be rewarded.
“Interestingly, it’s the real believers that make much more money.”
Original art by CryptoKitties (@cryptokitties)
Photos by CoinDesk & Wolfie Zhao