And Then There Was One

In an astonishing six months as crypto winter hobbled even well-funded crypto companies, Binance defended its position at the top of all crypto exchanges and took down its $40 billion rival, FTX. That’s why Changpeng Zhao is one of CoinDesk’s Most Influential 2022.

AccessTimeIconDec 5, 2022 at 12:39 p.m. UTC
Updated Dec 29, 2022 at 4:15 p.m. UTC
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Emily Parker is CoinDesk's executive director of global content. She was member of the State Department's Policy Planning Staff, a writer/editor at The Wall Street Journal and editor at New York Times. She is author of "Now I Know Who my Comrades Are: Voices from the Internet Underground" (FSG). She speaks Chinese, Japanese, French and Spanish.

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More: An NFT of the work excerpted above was sold at auction on Coinbase NFT. A percentage of the sale went to oneearth.org.

The past half year in crypto has been one of bankruptcies, layoffs and steep losses. But two supremely powerful players stood in stark contrast to the wreckage. One was Sam Bankman-Fried (SBF), the CEO of cryptocurrency exchange FTX, and the other was his competitor, Binance CEO Changpeng Zhao, better known as CZ. With FTX’s dramatic collapse, now we are down to one.

There’s no question that CZ played a significant role in FTX’s demise. But before we get to that, it’s important to note that before this latest drama, Binance was already the world’s largest exchange by trade volume. CZ leads Binance on his own terms, refusing to be labeled as belonging to any one specific country. He is both everywhere and nowhere. Back in 2018, I asked CZ where he was based. “People still have this really strong concept of where your company is, and where you are,” he told me at the time. “A company is a concept. An organization is a concept.”

When I asked where he called home, he said, “I don’t really have any answer to that. Earth?”

These words might sound unorthodox in the world of traditional finance but we’re talking about crypto, and one could say that CZ’s attitude captures the spirit of a global and decentralized form of money. So does his rejection of fiat currencies and the traditional banking system – in June he told CNBC, “I don’t have dollars, everything is in crypto,” and at Consensus earlier this year he told me that he has a bank account “but I don’t use it at all.”

Not all governments are fans of Binance’s approach. But even as the exchange encountered friction from various regulators, its crypto-world influence continued to grow. Earlier this year, as other companies were laying off employees, CZ was flexing Binance’s plans to hire. CZ has nearly 8 million followers on Twitter and devoted fans all over the world. Binance recently invested $500 million in Twitter, ensuring the exchange has a seat at the table during the reign of Elon Musk. Despite CZ’s own lack of interest in using a bank account, Binance is reportedly looking into buying banks.

But it was with FTX’s downfall that CZ really consolidated his power. Following the publication of Ian Allison's fateful CoinDesk article showing that FTX sister company Alameda’s balance sheet was largely made up of FTX-issued token FTT, CZ publicly announced Binance would sell its FTT holdings. Soon after that, Binance announced its intent to buy FTX, then pulled out after taking a closer look at FTX’s situation and deciding it was beyond repair. This contributed to a widespread loss of faith in FTX as concerned investors rushed to withdraw their money. The fall was swift: On Nov. 9, CZ said that an FTX acquisition is “not a win for us.” Two days later, FTX filed for bankruptcy protection.

This initially looked like a brilliant chess move on the part of CZ, as his actions contributed to the deathblow of his former competitor. But as the story developed it became clear this was much bigger than a rivalry between exchanges. More alarming information about FTX surfaced – including reports that FTX was using its customers’ money to pay for risky bets at its sister company, Alameda. Sam apparently cashed out $300 million of his investors’ money. Now, much of FTX’s funds is missing and creditors don’t know if or when they will see their money again.

In other words, regardless of what CZ’s actual intentions may have been, he ended up on the right side of history.

I would argue that Binance’s influence became more controversial after FTX fell. Because that’s when CZ began assuming Bankman-Fried’s previous role of crypto industry “savior.” FTX was not as big as Binance, but it punched above its weight. Over the past year, SBF became known as a kind of white knight, attempting to bail out distressed companies like Voyager Digital and BlockFi. Now that FTX is out of the game, Binance has stepped up to the plate. Binance committed $1 billion in BUSD (Binance’s stablecoin) for a recovery fund that aims to buy distressed assets and support the industry. Then Binance committed $1 billion more, also in BUSD. There are other contributors to the fund, such as Aptos Lab and Jump Crypto, but CZ is very much the face of it. “Binance’s Billionaire CEO Casts Himself as Crypto’s New Savior,” read a recent Bloomberg headline.

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Changpeng Zhao, CEO of Binance, at Consensus Singapore 2018 (CoinDesk)

If this all sounds familiar, it’s because it is. “Crypto’s Last Man Standing,” read an Economist headline about SBF in an article from July of this year, describing him at the “center of attempts to rescue beleaguered crypto firms.” These are, of course, media headlines, not the actual words of SBF or CZ, but there is still no question that CZ is widely perceived in a similar savior role that SBF played. Binance US is even bidding for Voyager, the same crypto lender that FTX tried to acquire. SBF famously strived to gain power and influence in Washington, D.C.; now, Binance US is forming a political action committee, or PAC.

This role of crypto savior is problematic for several reasons. First, it goes against the core ideals of crypto, which is supposed to be trustless, decentralized and resistant to a single point of failure. But there are practical consequences as well. Because FTX was doing business with so many companies, its implosion triggered a domino effect. BlockFi, one of the companies that FTX tried to rescue, just filed for Chapter 11 bankruptcy. Other companies, including CoinDesk sister company Genesis Trading and Gemini, have suffered from contagion. There is likely more to come. The fall of such a well-known and once well-liked figure as SBF has also dealt a major black eye to the crypto industry, which already struggles to gain trust from regulators and much of the public.

SBF’s downfall, of course, was due to his own actions. But his outsized influence certainly exacerbated the wreckage. Now, if something were to happen to Binance the fallout would potentially be even more devastating. Who would be left to come to the rescue of the world’s largest exchange? Perhaps CZ truly does want to use his power to rescue an industry in which he clearly believes. But what recent history has taught us is that crypto should not place too much hope in any one savior, regardless of who that savior might be.

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Emily Parker is CoinDesk's executive director of global content. She was member of the State Department's Policy Planning Staff, a writer/editor at The Wall Street Journal and editor at New York Times. She is author of "Now I Know Who my Comrades Are: Voices from the Internet Underground" (FSG). She speaks Chinese, Japanese, French and Spanish.


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Emily Parker is CoinDesk's executive director of global content. She was member of the State Department's Policy Planning Staff, a writer/editor at The Wall Street Journal and editor at New York Times. She is author of "Now I Know Who my Comrades Are: Voices from the Internet Underground" (FSG). She speaks Chinese, Japanese, French and Spanish.