Binance billionaire CZ plans life after prison

Back, that is, from a US prison halfway around the world. However, the cryptocurrency billionaire known as CZ is not back at the helm of the largest crypto exchange, as his agreement with the Department of Justice bars him from leading the company. And he says he’s okay with that.

After his appearance in Dubai, Zhao spoke to Bloomberg a day before Donald Trump’s victory in the US presidential election sent cryptocurrency prices soaring and CZ’s estimated net worth to nearly $53 billion. He reflected on his forced separation from Binance and four months in prison during which he spent the time exercising, writing a book and speaking crypto with fellow inmates.

“I don’t think I want to come back” as Binance’s CEO, Zhao said in the interview, his first comments to the press since his release. “I have been leading the company for seven years. I enjoyed it. It’s a lot of work. But I think this chapter is this chapter.”

CZ is back!! And it’s torn 💪@cz_binance how many pushups did you do every day? pic.twitter.com/N5MNQ8AFbi

— Quinten | 048.eth (@QuintenFrancois) October 31, 2024

Zhao said he has even received offers to sell his controlling stake in the stock market – equity that makes up the bulk of his net worth – but would not disclose from whom or for how much.

“I’m not saying I’m going to hold the equity forever or not,” he said. “I’m happy to consider any offer, but so far I haven’t done anything. But, you know, I’m just a regular shareholder at this point.”

However, the feverish reception for Zhao’s re-entry into the crypto community at Binance’s razzle-dazzle event was indicative of how intertwined the exchange and its founder are, despite efforts to distance themselves and satisfy deals with the Department of Justice. When Binance agreed to pay $4.3 billion for violating US sanctions and allowing Americans to trade on an exchange without a license, Zhao’s resignation as CEO was a key part of the fine print.

Now a self-proclaimed passive cryptocurrency investor, Zhao, who has the Binance logo tattooed on his arm, claims that his “rogue status” hasn’t deterred people from doing business with him.

Before the DOJ deal went through and Zhao was still CEO, Binance invested $500 million in Twitter’s acquisition by Elon Musk, now known as X. Since then, the social media platform’s value has taken a hit. And at the same time, Musk became one of Trump’s top backers, using the platform to champion the presidential candidate and welcoming right-wing influencers previously banned for violating hate speech rules. Now that crypto-promoter Trump has won a second term in the White House, the outlook for the industry is much brighter than it was under President Joe Biden’s administration, who launched a massive regulatory crackdown on digital asset companies, including Binance. Trump’s victory pushed Zhao’s estimated net worth up $12.1 billion in one day, according to the Bloomberg Billionaires Index.

Zhao, who declined to comment on the US election, said he was pleased with the direction X took.

“I think since Elon took over, things have moved a lot faster on Twitter,” he said. “There are new features, change is happening at a much faster pace. I’m not too concerned about the value of the investment going up or down. We are very long-term investors.”

Just a month before his return to the crypto conference circuit, Zhao was sharing a cell at Lompoc II Federal Penitentiary, a minimum-security prison in Santa Barbara County, California, after striking a deal with US authorities to end a investigation that had been suspended. above him and the company he had been building for years. He pleaded guilty to failing to implement an adequate anti-money laundering program at Binance, a crime that allowed groups from Hamas to al-Qaeda and other bad actors to trade on the platform.

He was sentenced to prison in April, becoming the richest US inmate and the first executive to serve time for violating the Bank Secrecy Act – an offense usually seen as a reporting violation that, in his case, was bolstered by unusually egregious facts. Federal prosecutors had argued for the three-year sentence, seeking to make an example of a leader in an industry that has seen more fraud and scandal.

Armed with advice from a prison counselor to keep a low profile and no more than $50 in the commissioner’s account, CZ checked into what’s known as “Lowpoc low,” a facility with an adjacent camp that often houses defendants with white-collar workers and once housed Richard Nixon’s chief of staff after the Watergate scandal.

Searched out and placed in a clan-designated group — segregation that Zhao said helped provide protection from violence and extortion — his days were a mix of pushups, writing books and awful prison food: heavy on starch and sugars, low in protein save for what he described as Spam-like meat and some fried fish.

“I usually stick to a paleo diet, just protein and vegetables. That’s not possible there,” said Zhao, whose austerity is well known to friends and family.

“Big Bitcoin Guy”

Many of the inmates didn’t recognize Zhao at first, he said, though word eventually got out that he was a “big Bitcoin guy” and “not poor.”

“Many of them asked, for example, which coins to buy?” he said during the interview on Monday. Even some of his guards were asking him for advice. “I’m like, look, I’ve been here, you know, I don’t have access to any information. I don’t even know what the market looks like.”

He befriended a well-read crypto and blockchain inmate who was serving a 25-year sentence for bank robbery. They became workout buddies, spending 90 minutes a day in the outdoor gym. Since his release, Zhao said he has been trying to connect the inmate with pro-gift lawyers in hopes of shaving a few years off his sentence.

While the face of Binance was behind bars, former Abu Dhabi regulator and new CEO Richard Teng led the company into a post-CZ era. Many crypto companies that found themselves in the 2022 bear market or targeted for US government crackdowns in recent years have not recovered, although Binance remains one of the most prominent exchanges. Even Zhao seems to appear with little reputational damage.

The other founder who responded to Zhao’s meteoric rise was his fiercest rival and partner on social media, FTX’s Sam Bankman-Fried. Bankman-Fried, who is serving 25 years in prison for fraud, partly blamed Zhao for speeding up the banking that led to the FTX implosion in late 2022. Both men ended up in prison, but Zhao says the common comparison between their cases is misplaced.

“That’s like comparing someone who steals money to someone who failed to register a company,” he said.

Zhao is adamant that he is no longer involved in Binance’s decisions and has no desire to return. Explores investments in artificial intelligence and biotech and launches Giggle Academy, a non-profit educational app.

Of course, his controlling stake means his presence is still big on Binance. CZ’s shareholder rights were upheld in the lawsuit, and high cryptocurrency prices left him as the 25th richest person on the Bloomberg Billionaires Index.

Binance leadership asks for his advice “very rarely,” he says, and obliges only with “historical context.” He is also a co-defendant in a number of civil lawsuits, including one filed by the Securities and Exchange Commission, along with Binance. Yi He, the co-founder of Binance with whom Zhao has children, is still an important figure at the company.

Now back home with his family, contemplating life after prison, Zhao says he’ll always have an “emotional attachment” to Binance, even if he doesn’t feel a burning desire to return to the CEO job.

“He’s like a kid, right?” says about the company. “Once he grows up, he doesn’t need to be tied to me.”

So what’s life like now that his cryptic child is all grown up?

“It’s a lot more relaxed,” he says.