Changpeng 'Cz' Zhao, the last survivor of Crypto

On Tuesday afternoon, Changpeng Zhao, managing director of the world's largest crypto exchange, took the phone of his former partner, who became an arch rival Sam Bankman-Fried. He was ready to negotiate a ceasefire of $ 600 million in a public feud that had shaken the crypto industry.

but Zhao decided quickly, FTX, Bankman-Frieds company and the biggest challenger of his own binance, in the hard competition for the dominance of the offshore market in risky and complex trade in digital assets. FTX was flooded by customers who reclaimed their money, and urgently needed billions of dollars to stay over water. Zhao agreed to save FTX and take over its rivals.

But only a day later he gave up the deal. On Friday, Banksman-Fried's 32-billion dollar empire in the USA reported bankruptcy.

The collapse of FTX immediately brought the weight of the strength on the $ 1-to-dollar cryptoma market. "To get out [ZHAO] and attack the token, in my opinion, will be one of the biggest corporate attacks that have ever taken place," said Jon de Wet, Chief Investment Officer at the digital asset manager Zerocap. "This is a private equity corporate-raider stuff." Zhao denies to have a "master plan" to take over FTX.

In just five years, Binance has developed into an industry titan with a constellation of global subsidiaries - many of them on behalf of Zhao. In the last month alone, $ 2.8 trillion in crypto coin and derivative transactions were processed, according to CryptoCompare data. According to Forbes, the 45-year-old, who is generally known as the "CZ", was considered one of the richest people in the world before the crypticism of crypto prices reduced his assets to $ 17 billion.

interviews with former employees, business partners and industry colleagues draw a portrait of a split entrepreneur who wants to grow tirelessly at all costs. Several of those who worked with him said that security and compliance with legal regulations in the race for supremacy were sacrificed. Binance said: "In this rapidly growing industry, we are constantly striving to develop and ensure compliance with legal regulations and the protection of the account holders."

Zhao, who refused to be interviewed, is worshiped by an army of investors who are in a hurry to make selfies with him. But while his "Binance Angels" spread the company's gospel, the exchanges of money also criticize the exchange of money, which they say was lost during a series of technological failures at the height of the chaos on the cryptomarkt in 2021.

Several former employees described a motivated manager who drove them to the edge of her comfort zone. Zhao's hard character showed himself this week when he said that he would sell around $ 600 million in FTT, a token issued by FTX, that had been held by Binance since the exit from an early stake in the company. This step pressed the price of the token, with FTX recorded a record of $ 5 billion in customer withdrawals on Sunday.

Bankman-Fried alluded to the wrangling on Twitter. "At some point I have more to say, so to speak.

Zhao says the sales were a cautious step to avoid losses, and the failed takeover was a good attempt to prevent a market panic. "Did CZ take a chance? Yes. Did CZ orchestrate everything? No. FTX ultimately brought himself to this position," said a senior employee of a retail company.

Zhao was born in China and is Canadian citizen who spent his teenage years in Vancouver, where he worked at McDonald’s. After studying computer science, he worked on trading software, including for the Tokyo Stock Exchange. In 2013 he switched to crypto and started Binance four years later. Zhao repeatedly repeated that the company had no fixed headquarters in accordance with the decentralized ethos of crypto. In fact, the employees of Shanghai and Tokyo worked out, but were warned not to wear Binance clothing in the office or to disclose on LinkedIn where they worked.

After a security violation in 2019, employees in Chat messages from Financial Times complained that users were "indicating our clear negligence" and "very careless know-your-customer security and procedures". A former business partner said Binance spoke "a big game" about combating money laundering and Kyc controls, but "resistant to throw human resources on compliance problems".

The supervisory authorities have been reprimanding in a number of financial capitals since then, including Great Britain, which last year warned that the "complex and risky financial products" of the crypto giant "are a significant risk for consumers".

Some viewed Zhao as an ambitious successor to entrepreneurs from Silicon Valley. "Apple sold computers, we tried to reinvent the financial system," said a former employee. But a former business partner said that internal rivalry had made Binance unpredictable and sometimes chaotic. "There was a conscious decision to make people fight for supremacy. It is a very Machiavellist vision of leadership that CZ has adopted in my opinion," said the person.

In a blog post about his leadership style, CZ said: "Controlled chaos is a kind of structure."

After collapsing with the supervisory authorities, Zhao promised to abolish the "decentralized" organization and to set up a normal home base. "I am a technology entrepreneur and we take this step towards a fully regulated financial transaction," he said last year. But his conversion to financial orthodoxy still has to be completed. Binance said it invested heavily and hired 500 employees in the areas of compliance and law enforcement, but did not reveal any regular corporate structure or headquarters.

However, the company has secured supervision in several jurisdiction, including registration in France and a license in Dubai, where Zhao lives. Zhao said this week that the decline of his main competitor was not a "victory" for Binance because he would sharpen the regulatory attention for crypto operators. The question now is whether his company can take root and escape the traps in which his competitors have come into being.

joshua.oliver@ft.com, adam.samson@ft.com