What’s behind the success story of crypto billionaire CZ?

February 15, 2018 09:01
Changpeng Zhao probably would not have become a billionaire had Chinese authorities not decided to clamp down on cryptocurrency trading. Photo: tech.qq.com

The story of crypto-billionaire Changpeng Zhao, a.k.a. CZ, has fueled a lot of discussion in public.

Many are amazed, even envious, that he was able to gain a personal wealth of US$2 billion in less than a year. But there are also people who sneer at his success, saying that we should not hold in high regard someone who has amassed a great fortune from speculative activities.

So let's talk a bit more about CZ and his rapid rise in the world of business.

Cryptocurrency exchanges have been sprouting across China over the years. In fact, Zhao, who created Binance in July 2017, is a latecomer.

So how was Binance able to stand out and become the world’s third largest cryptocurrency exchange amid such fierce competition?

Some industry insiders say Zhao’s success is 30 percent personal ability and 70 percent good luck.

The luck part, ironically, has to do with mainland authorities’ sudden crackdown on cryptocurrency trading platforms in September last year, which put the operation of the two-month-old Binnace in jeopardy.

Leading players such as Huobi, OKCoin and Bitcoin China promptly shut down their operations in response to the officials’ request.

Zhao, who has put all his money in his startup, could just have given up.

But the Canadian Chinese, who had worked at Tokyo Stock Exchange and Bloomberg, came up with the idea of shifting his operations overseas.

Currently, the Shanghai-based company generates nearly 70 percent of its turnover from the United States and Japan.

One can say, therefore, that if Chinese authorities did not ban cryptocurrency trading, Binance might have remained a low-tier player in China.

Also, without his strong technical background and international exposure, Zhao would not have been able to successfully penetrate the international market.

Personally, I appreciate technical innovations such as blockchain, cryptocurrencies and initial coin offerings. But that does not mean I am encouraging people to jump on the bandwagon.

In fact, the cryptocurrency boom looks bubbly, and I am afraid it will burst at some point.

This article appeared in the Hong Kong Economic Journal on Feb 14

Translation by Julie Zhu

[Chinese version 中文版]

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Hong Kong Economic Journal columnist