POOL, GETTY, FTX, CNN
By Michelle Toh, CNN Business
The Canadian billionaire has made headlines this week for offering to come to the aid of entrepreneurs who are facing a cash crunch, in efforts to help “rebuild” the sector.
Zhao, who goes by his initials “CZ,” made his pitch just days after rescinding an offer to help bail out one of the biggest firms in the space, FTX. The company went bankrupt two days later.
Zhao announced Monday that to mitigate any further damage from the collapse of FTX, his team would establish “an industry recovery fund, to help projects who are otherwise strong, but in a liquidity crisis.”
Binance, the world’s largest cryptocurrency exchange, would welcome other industry players who’d like to participate as cash investors, he said on Twitter.
“Crypto is not going away. We are still here,” Zhao added. “Let’s rebuild.”
Zhao launched Binance in July 2017 in China, gradually building it into the world’s largest crypto exchange.
In September of that year, according to a company blog, most of its employees left the country after the Chinese government issued a memo banning crypto exchanges. Zhao said it was “before Binance could even be properly established” or incorporated in the country.
Four years later, in September 2021, the Chinese authorities declared all cryptocurrency-related business activities illegal and vowed to clamp down on illicit activities involving digital currencies.
According to company blog posts, Zhao was born in China, lived in the central province of Anhui, and, at age 12, emigrated to Canada with his mother in 1989. He described waiting for three days outside the Canadian embassy for a visa, taking turns with his family at night to keep their place in line.
Zhao spent his teenage years in Vancouver and previously worked at McDonald’s to help support his family.
After studying computer science at McGill University, he worked on trading software for the Tokyo Stock Exchange and Bloomberg.
“He then learned about bitcoin in 2013 during a game of poker, after which he decided to go all-in on crypto by dedicating his life to it,” according to Binance. “He even sold his apartment to buy bitcoin.”
The road to success hasn’t been easy.
Like other exchanges, Binance has faced significant regulatory hurdles around the world in recent years, including a ban in the United Kingdom and other restrictions in countries including Canada.
The company is also on an investor alert list in Singapore, where the central bank has warned that it is not licensed or regulated locally.
Last week, Zhao addressed speculation about the company’s status in the city, writing on Twitter that Binance was “not banned, just no license yet.”
Zhao has spoken out about some of the company’s challenges, saying that as a Chinese-born business leader he has faced undue suspicion.
“The inference is that because we have ethnically Chinese employees, and perhaps because I am ethnically Chinese, we are secretly in the pocket of the Chinese government. We are an easy target for special interests, media, and even policymakers that hate our industry,” he wrote in a recent blog post.
“I am a Canadian citizen, period.”
As of September, Binance had subsidiaries in countries including Spain, Italy, France, Bahrain, and the United Arab Emirates, Zhao added.
Zhao catapulted to mainstream attention earlier this year as he became one of the richest people on Earth.
In January, his estimated net worth reached at least $96 billion, putting him in the ranks of leaders such as Oracle founder Larry Ellison and surpassing that of Mukesh Ambani, the Indian tycoon.
His projected fortune has since fallen to $16.9 billion as the value of cryptocurrencies crashed, according to calculations from the Bloomberg Billionaires Index.
A Binance spokesperson previously told CNN Business that “CZ intends to give away most of his wealth, even 99% of his wealth, just like other entrepreneurs and founders.”
A whirlwind week
Zhao has been under pressure to step in as one of the last few titans standing amid the industry’s worst-ever turmoil.
The sector is currently in the midst of a so-called “crypto winter,” which was sparked by the collapse of TerraUSD, an algorithmic stablecoin, which is a type of cryptocurrency that was supposed to be pegged one to one with the US dollar.
In May, TerraUSD lost its dollar peg, which led to the collapse of its sister token and eventually created a huge global liquidity crisis in the crypto industry.
Last week, he offered a lifeline to Sam Bankman-Fried, a 30-year-old rival who led FTX, one of the industry’s top players.
The Binance chief said his firm had been asked to help as FTX grappled with liquidity issues. In response, Binance announced it would buy its smaller rival.
But in a dizzying sequence of events, Binance almost immediately pulled out, saying that after reviewing FTX’s finances it had concluded that the company’s problems were “beyond our control or ability to help.”
The deal quickly fell apart, paving the way for FTX’s bankruptcy filing and the resignation of Bankman-Fried.
The news marked a stunning fall from grace for one of the industry’s most revered entrepreneurs, who himself had been billed as a savior of crypto after working to keep several industry players afloat in an array of similar deals this year.
Since the aborted purchase, Zhao has been candid about the sector’s remaining challenges.
Speaking in Indonesia on Friday, he urged regulators to look beyond anti-money laundering and know-your-customer rules, to focus instead on the operations, business models, and reserves of exchanges like FTX.
He said that comparing the current crypto chaos to the 2008 global financial crisis was “probably an accurate analogy.”
“It’s devastating for the industry. A lot of consumer confidence is shaken,” Zhao added. “We’ve been set back a few years.”
In separate remarks in Indonesia on Monday, Zhao doubled down on his call for greater regulation.
There is a “lot of risk,” he said. “We have seen in the past week things go crazy in the industry, so we do need some regulations, we do need to do this properly.”
— CNN’s Matt Egan contributed to this report.
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