The best relationship between CZ and Binance: Mutual achievements can still be achieved after unbinding

Author: Luo Luo; Source: Hive Tech

"gm", ended his 119-day sentence, Zhao Changpeng told the outside world with the simplest good morning greeting on X that he was free again. In May of this year, Zhao Changpeng agreed to obey the sentence for accepting the charges of the US Department of Justice that Binance, which he led, violated the Bank Secrecy Act and anti-sanctions program, and went from Dubai to the United States to start a 4-month sentence.

Zhao Changpeng's first tweet after being released from prison has 13.88 million views, 190,000 likes, and 50,000 comments. People in the crypto community are blessing the founder of Binance to return to the free world.

No matter how much people hope that he can continue to lead Binance, according to the settlement agreement between Binance and the US Department of Justice, CZ (Zhao Changpeng's nickname in the industry) can no longer directly participate in the company's operations. However, as the largest shareholder of Binance, his influence on the company's major decisions remains. According to his previous plan, his future career focus will be in the field of education.

In the 10 months since Zhao Changpeng resigned as CEO, the world has witnessed one thing: Binance can operate normally without CZ. This also shows that the organizational structure, operating mechanism, and business logic established by Zhao Changpeng in Binance over the past 7 years have not become invalid due to his departure, and Binance's 200 million users and assets have not been threatened by his departure.

For a modern company, weakening the founder's influence on the company and giving full play to the kinetic energy of the organizational mechanism is the long-term solution. For crypto asset companies, this is also the safest strategy.

CZ returns to comment on Binance: I am doing well without him

"Being able to eat more than one serving of fruit every day" is probably the most direct and specific feeling of freedom for Changpeng Zhao. In the morning greeting tweet on the second day after serving his sentence, there is another impressive sentence: Binance seems to be doing well without me in the back seat, which is great. This is the dream of every founder!

This high evaluation from the founder is probably enough to make the entire Binance team excited and relieved.

Due to the settlement agreement with the US Department of Justice in November 2023, Binance was forced to change its leader. This is a hard-core test for Changpeng Zhao and the company he founded with all his efforts, including user trust and the ability to continue to operate internally.

At that time, Binance's ecological asset BNB fell by 13% instantly, and excessive funds flowed out of Binance. The market share of the world's largest cryptocurrency trading platform fell by more than 50% in the next month.

However, they all passed the test. The violent and short-term waves did not affect Binance's operation on the established track. Over a longer period of time, the world's largest cryptocurrency trading platform recovered its vitality under the efforts of the team led by the new CEO Richard Teng and co-founder He Yi, and its market share returned to around 50%. In June this year, it established a new milestone of "registered users exceeding 200 million".

Binance maintains leading market share in Q2 2024

In fact, for any great company, the founder's influence is maximized only in the early stage. To maintain long-term development, the long-term organizational mechanism, corporate culture, and goals at different stages established by the founder in the process of company development are the continuous driving force.

This is true for Microsoft and Apple. Although one is active and the other is passive, the two companies did not lose their core competitiveness due to the change of founders or CEOs after the change of leadership, and still maintained their dominance in their respective fields.

The effective principles and methodology that Changpeng Zhao brought to Binance have also been exerting a far-reaching influence. What helped them to successfully overcome the difficulties was the organizational mechanism, operating principles and corporate culture that the founder of the original company spent seven years designing, verifying and insisting on implementing for Binance, as well as the successor's clarification and promotion of stage goals.

Organizational mechanism protects Binance from personal influence

After the collapse of the well-known crypto asset trading platform FTX in 2022, Changpeng Zhao foresightedly proposed 6 principles for the healthy development of centralized trading platforms. Binance took the lead in practicing these rules, including:

The principle of avoiding user funds risks of "never trading and investing in user assets", the principle of not using native tokens as collateral, the principle of real-time proof of shared assets, the principle of maintaining strong reserves, avoiding excessive leverage, and strengthening and enforcing security protocols.

Binance's "user first" often emphasized in public is actually guaranteed by the specific implementation of these principles.

Even if Zhao Changpeng had to resign as CEO for regulatory reasons, until he went to the United States to serve his sentence, Binance never stopped recharging, withdrawing and trading. You know, in the crypto asset market, there are too many cases where the boss was arrested or disappeared for various reasons, resulting in the suspension of exchanges or even bankruptcy, and there are countless users who lost assets as a result, but this did not happen in Binance.

Binance's 100% proof of reserve (PoR) was announced to the public after November 2022, and was strengthened through the MT framework in the Merkle Tree movement in the exchange industry. Since then, Binance has a dedicated page for users to check the status of reserves in real time.

Binance Reserve Page

In July 2018, Binance established an "emergency fund" mechanism and created the User Security Asset Fund (SAFU), promising to take out a certain proportion of transaction fee income each year and continuously expand the growth of the fund. This money is always stored on the chain and visible to everyone through a public address.

The Binance SAFU address shows that the value stored in the fund currently reaches 1 billion US dollars, and it is all protected by the compliant US dollar stablecoin USDC during the term of the new CEO Richard Teng.

Another reason why Zhao Changpeng's departure did not affect Binance's internal operations is the company's organizational structure: flat and distributed, which to a certain extent has completed the "de-authorization" for the company and maximized the members' habit of taking the initiative and collaborating to ensure Binance's operating efficiency.

Rohit, who took office as Binance CTO in 2022, was surprised by this after working for a month: "Everything is on time." If someone arranges a meeting at 8 o'clock in the morning, the phone will ring on time at 8:00:00, not a second late. Rohit believes that Binance's "methodical" culture comes from its founder and then-CEO Changpeng Zhao, "his way of working sets the tone."

Changpeng Zhao once publicly announced the principles he abides by in life and work, among which he mentioned the team. He believes that the team should be above himself; if you don't want the organization to become obsolete, you have to frequently mobilize the team to provide growth opportunities for new leaders; in the chaotic early industry, let the team strictly implement the principles of security, compliance, ethics and neutrality, and operate in a regulated environment...

These principles that he has always followed and implemented really played a role in ensuring the smooth operation of Binance.

Richard Teng, the current CEO of Binance, also understands his established mission very well. He wants to use his rich experience in the field of compliance to lead Binance in a direction that is in line with the public interest and regulatory requirements.

Under his leadership, Binance has recruited more than 1,000 new employees this year, and former Senior Vice President of Compliance Steve Christie returned as Deputy Chief Compliance Officer (DCCO), working with Chief Compliance Officer Noah Perlman to strengthen Binance's global compliance program, including working with regulators, industry organizations and business leaders to promote the company's commitment to user protection and best practices and achieve strict regulatory compliance.

Since Richard Teng took office, Binance's institutional users have increased by 36% this year. In his view, this is a reflection of Binance's increasingly mature compliance.

Devote oneself to education, investment and writing books. Free CZ has many choices

Zhao Changpeng, who has unbound Binance, will not leave the crypto field. Instead, he has gained more time and devoted himself to the world outside the crypto circle.

In a tweet after his release, Zhao Changpeng briefly disclosed his recent plans. The online education platform Giggle Academy, which he had been preparing before serving his sentence, will be an important part of his future life; he will continue to invest in blockchain/decentralized technology, artificial intelligence and biotechnology.

In addition, he will also devote himself to charity and write books, and revealed that the book has been completed by about ⅔, "Writing a book is much more laborious than I expected, but I will stick to it."

This entrepreneur who doesn't like to waste time created Giggle Academy this year. In March, there was already a team of 10 people. They are committed to creating free, fun and easy-to-access learning tools for children around the world. Zhao Changpeng's initial idea is to create an Android version of the platform, because this may be a hardware that the target family can reach with a low threshold, and the touch screen of the mobile phone can also allow children to interact with the platform easily.

Giggle Academy's logo is also full of Binance elements - two yellow squares rotated and overlapped to form a sunflower face, and a black brush marked on it a playful expression of winking and sticking out the tongue. Crypto users know that the black and yellow combination is the official logo color of Binance.

Changpeng Zhao deliberately chose this logo, in his words, to "pay tribute to Binance."

   Giggle Academy's Logo pays tribute to Binance

Changpeng Zhao positioned the Giggle Academy project as "an important part of his future life", which shows his importance to this new project. It is not certain that Giggle Academy will become a new project of Binance's public welfare and charity in the future, because charity is also Zhao's future plan.

Giggle Academy is currently a Web2 project, and part of Zhao Changpeng's investment vision has also been invested outside the circle, such as artificial intelligence and biotechnology, which will be more conducive to his tracking of changes in the world outside Web3, so as to influence Binance to cross the gap and become a platform serving 1 billion users as the largest shareholder of Binance, and then guide the crypto-financial industry to a more general public.

However, he still puts blockchain investment first, but also emphasizes, "I am a long-term investor who cares about impact, not returns."

There is no doubt that the free man CZ has more choices. The experience of creating Binance has subtly affected his future career, and his influence on Binance and the crypto industry will never disappear.

(Disclaimer: Please strictly abide by the laws and regulations of your location. This article does not represent any investment advice)