Binance Founder Changpeng Zhao Accused of Participating in ‘Extensive Cheating Network’
- Author, Essay
- roll, BBC News World
Changpeng Zhao rose to prominence when one of the world’s biggest cryptocurrency scandals came to light in 2022.
The founder of Binance, the world’s largest digital currency trading platform, made headlines in November 2022 after announcing that he was considering buying his collapsing competitor FTX.
But Zhao soon changed his mind and just watched his competitor crumble, dragging cryptocurrencies into a resounding crash that persists to this day.
Eventually, FTX went bankrupt and its founder, Sam Bankman-Fried, was indicted by the US court on criminal charges. This is how after the collapse of FTX, Zhao became the new “king of cryptocurrencies”.
But within months, US authorities filed charges against the company he runs, alleging the company was operating illegally in the country and violating a range of financial laws.
Trying to navigate the turbulent waters, Binance continued its operations without major scares until, on Monday (5/6), authorities again charged the company and its founder.
This time, the United States Securities and Exchange Commission (SEC) sued the company and Zhao for violating the country’s investment laws.
Binance is the largest cryptocurrency platform in the world
“Across 13 counts, we allege that the Zhao and Binance Entities engaged in a vast web of deception, conflict of interest, lack of disclosure, and calculated circumvention of the law,” the president said. of the SEC, Gary Gensler.
Zhao in turn denied the allegations on Twitter and said his company has yet to see the allegations.
“My mother and I left China”
Known in the media as Changpeng “CZ” Zhao, the businessman was born in the Chinese province of Jiangsu in 1977.
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 age 12 after the Tiananmen Square massacre.
Zhao was born in Jiangsu Province, China in 1977
“On August 6, 1989, my mother and I left China and migrated thousands of miles to Canada. For those familiar with Chinese history, that was two months after the events of June 4, 1989,” said writes Zhao.
“I remember the queue in front of the Canadian Embassy that 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 making burgers at McDonald’s.
He then studied computer science at McGill University in Montreal and then completed an internship at the Tokyo Stock Exchange before joining Bloomberg Tradebook in New York.
A few years later, Zhao returned to China to work in tech companies, and in 2017 he founded Binance.
But the Chinese government banned cryptocurrency platforms from operating in the country – and Zhao migrated again, consolidating its business in other latitudes.
Binance grew and quickly became the largest cryptocurrency buying and selling platform in the world.
“A vast cheating network”
But problems along the way were not long in coming. UK authorities banned Binance operations last year; while in the United States, the first judicial investigation was opened against him for alleged illegal operations in the country.
The latest known development is the lawsuit filed last Monday in federal court in Washington.
The SEC accuses the company and its founder of mishandling user funds and lying to investors and regulators, among other alleged wrongdoings.
Zhao said he has yet to see the allegations.
The lawsuit alleges the company ignored U.S. securities laws and made billions of dollars by putting its clients’ assets at “significant risk.”
The lawsuit also says that Binance and Zhao covertly control their clients’ assets, allowing them to merge and divert funds, and that the company has created separate US entities “as part of an elaborate plan. to circumvent federal securities laws. American Furniture”.
Authorities allege that between at least September 2019 and June 2022, Sigma Chain, a trading company owned and controlled by Zhao, engaged in trading that artificially inflated the trading volume of cryptocurrency securities on the platform. Binance.
“The public should be cautious about investing any of their hard-earned assets in illegal platforms,” advised SEC Chairman Gary Gensler.
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