Binance CEO: 4 Months in Prison, $4 Billion Fine, and What Comes Next

CZ, welcome to the All-In podcast.

>> Well, thanks for having me here.

>> It's really, really great to see you.

>> It's a pleasure, Hannah.

>> I want to go all the way back to the

beginning because I think a lot of

people don't really know your background

the way that they probably should. The

part of the background that I really

care about is there's parts of your

early journey in Canada, which is very

similar to mine. You worked at

McDonald's. I worked at Burger King.

>> Okay.

>> But before that, your parents were able

to immigrate from China right around

Tanen Square, right? My father went to

you uh Canada to study in 1984. That's

five years before tan square.

>> How did that come about? So your father

stayed in Canada once he went there or

no?

>> Uh he he could visit us every twice a

year basically but he would most of the

time he was in Canada

>> and um yeah so

>> and he was a teacher in China.

>> He was a teacher professor. He was a

professor in China and then he went to

do a exchange program in University of

Toronto first.

>> Uhhuh. And then uh a couple years later

he moved to UBC University of Brit Brit

British Columbia in Vancouver. And then

he was there. We were applying back back

then it's actually very difficult to get

a passport. It takes like three or four

years to get a passport. We started

applying in 1985 fiveish. It took like

two three years to get a passport and

then uh after you get a passport

>> meaning a Chinese passport.

>> A Chinese passport. Yeah. So um and then

it takes like another few years to get a

visa. Like that's just how long the

process takes back then. And then uh

yeah, so we got it shortly after uh in

18 uh 1989.

>> When you look back, it almost seems

fortuitous. Isn't there a version where

post tan men they kind of just shut

everything down and say, "Okay, let's

just reset and then maybe they wouldn't

have approved the visa or

>> No, actually after that the visa got

easier. The passports like that got

harder." So they they don't they no

longer issue new passport like the

reissue of new passports got harder. But

we we were lucky. So we got the

passports like you know like maybe a

year before that and then we're waiting

for the visa and then afterwards the

visa got easier. So in some ways that

actually kind of helped us to get to get

the visa. Wow.

>> Yeah. In some really weird way.

>> Did that event shape your perspective in

any way shape or form or not really?

Were you too young or no? You were what

12?

>> I was 12. So I think consciously no. uh

this it didn't change me that much but I

subconsciously I think you know there

were discussions about know democracy

versus um so there's some discussions I

was actually living on a university

campus back then uh the China the

Chinese the China science and technology

universities one of the top four

universities in China so there were a

lot of discussions among the university

students which were older like which

were probably seven to nine years older

than me so there were some discussions

but I'm I was 12 so um I wasn't really

clued into it but I think subconsciously

It may have some kind of a subconscious

impact. I don't know.

>> And what was it like when you you moved

to Vancouver?

>> I moved to Vancouver. Yeah.

>> So you land in British Columbia.

>> Yeah.

>> In Vancouver. It's like a different

>> It's just different.

>> It's very different. It's very

different. Um it's just a completely new

country and then uh

>> did you know English at all or No,

>> I studied English for like couple years

in in school but you know I was not

fluent at all. But yeah, Vancouver is

great. Canada is you know nice green

nice greenery. um open space. Uh

everything's pretty uh the living

standard is high. Everything's pretty

pretty good. Um everything is very

clean. Uh the fruits are bigger. Um so

>> it's it's just a really nice

environment. Yeah.

>> Did both your parents work when the

family was reunited? What do they do?

>> Uh so my father stayed uh was like

assistant professor in the in the in the

un university. He gets like a thousand

Canadian dollars per month of like I

don't know what do you call it?

>> Like a stipent.

>> Like a stipent.

>> Yeah. We get some like really lowcost

house housing with the the faculty

housing from uh UBC. So we lived on

campus. Uh we I think on the third day

of our arrival in Canada, my mom went to

a factory sewing factory to work like

sewing clothes. Uh she was a math and

history teacher in China, but she

doesn't speak that much English. So she

couldn't get the same level of jobs and

she basically can only work at a minimum

wage factory.

>> Yeah.

>> Uh she did that for like seven 10 years.

Um and yeah so she she just worked

there.

>> My mom was a nurse in Sri Lanka and when

we immigrated when we got refugee status

>> my father was unemployed.

>> Yeah

>> and my mom became a housekeeper

>> and that's what she did and then she

became like a nurse's aid and and then I

think when I was like 14 is when I got

my first job.

>> Yeah. Yeah. I got my first job at

McDonald's at I think it's 14 or 15. I

think it was 15.

>> 14. Yeah.

>> We're the same age so it probably would

have been 14. I don't know what the Do

you remember what the minimum wage was

in British Columbia that

>> I do. Uh the minimum wage was $6, but

McDonald's

>> Oh, that's incredible. In Ontario, it

was 455.

>> So, but in McDonald's, they pay 450.

That's below minimum wage

>> because the McDonald's somehow had like

a special exemption because they a lot

of young kids work there.

>> Yeah.

>> So, um so, uh I think it was on my 14th

birthday that I applied for the job and

then a week later I was flipping burgers

there. Um and it was the first income I

had. You're not like this precocious

technical wonder kid who's coding 247

and learning computer science or were

you?

>> Uh no I wouldn't describe me as that. I

think I'm I'm a technical guy. Uh I

started computer science. I was learning

pro I was interested in programming even

in high school. Um but I wasn't a

programming wizard. Uh I wasn't like you

know one of those really genius coders.

>> Yeah.

>> I think I'm a decent coder. Uh I think I

I wrote some decent code in my in my

career and then um when I was like third

20 28 30-ish I moved away from coding. I

was like doing more business development

um sales and etc. So there was like

maybe I would say 80 years of my career.

>> So you're a normal immigrant kid

learning to adapt in Canada.

>> Yeah.

>> Did you have a lot of friends?

>> Yeah, I had a lot of friends. I had a um

my

>> only Asian friends or No,

>> both. I actually had like both Asian and

non-Asian friends. Uh but uh uh I was

actually in our school most of the

Asians hang out with Asians but I was

actually one of the exceptions that I

had like Caucasian friends. I had all

kind of uh uh different friends.

>> Yeah.

>> My teenager years in Canada was great.

It was like some of the best years like

I think those years are really shaped to

me to be a happy person. I'm generally a

happy person.

>> How did it feel when you weren't able to

get into my alma mater University of

Wateroo and so had to settle for McGill?

>> How did that make you feel? Does it make

you feel stupid?

So actually u I was decid my sister went

to Waterloo so I was I was uh deciding

between Waterloo and U McGill and maybe

UT. Uh I knew I wasn't going to go to

UBC. I wanted a different city.

>> Yeah.

>> And actually UBC gave me an offer but I

just knew I I don't I don't want to go

go there. Um at the at the time I uh my

friend's uh mother who I really respect

uh uh she said well you might want to

become a doctor because doctors have a

good living good a good lifestyle. Um I

took her advice. I study biology and

what is not much of a biology school.

>> True.

>> So, uh I went to McGill. Uh but then um

one semester later I said, "No, no more

biology. I got to I'm going to move to

computer science."

>> Was it a typical kind of college

experience for you? Did you have great

jobs in the summertime or were you just

like a an average normal university kid?

>> How'd you pay for school by the way?

>> I worked every summer. Uh I worked every

summer and I also worked part-time

during the school year. Um so

>> So no debt. You were like I must

graduate without debt.

>> Yeah. I didn't take any student debt. Uh

the first year I actually still took

about $6,000 Canadian dollars from my

dad. Um the second year I was still a

bit short. My sister gave me $3,000. And

then from that point on I never took

money from uh uh uh at all. I just I was

self-sustainable.

>> Wow.

>> Yeah. So no student debt. Very lucky. U

and uh but I just worked every summer

every like Yeah.

>> You know the best thing about Waterlue

which was a savior for me

>> the co-op was co-op program. Yeah. And I

had these incredible co-op jobs. I still

graduated with about $30,000 of debt.

>> But I was also pretty prolific trader

>> and equities.

>> Okay.

>> And my boss, this guy Mike Fischer,

>> did this incredible kindness to me where

>> I was working at a bank. And I was a

derivatives trader. That was my day job.

But I was trading equities and I had

made him enough money. And he said, he

called me Sherman. Didn't call me

Chimathi. He said, "Sherman, how much

debt do you have?" And I said, "It's

about 30." I said, "Fish, it's about

30,000." 32,000.

And he said, "Go downstairs right now to

the CIBC and pay your debt and I'll

write you a check."

>> Wow. You should have.

>> And he wrote me a $32,000 check.

>> I should have said 3,000 300,000.

>> But Canada is incredible because you can

get this education and it doesn't saddle

you with this

>> Yeah.

>> debt that you can't overcome,

>> which is not true in the United States

for many people anymore.

>> Yeah. Even in McGill, there were people

from the United States going to McGill,

paying international student uh tuition

and it was still cheaper than the US. I

was like that's crazy.

>> That's crazy.

>> Yeah. So yeah, we were lucky that the US

the Canadian tuition was okay.

>> So you graduate from McGill in computer

science.

>> Yeah. In computer actually I didn't

graduate from McGill. Um I went there

for four years and on my third year I

got an internship on my fourth year I

got my third year I got an internship

job and then um u extended extended

extended and I didn't go didn't go back

to McGill. So I didn't graduate from

McGill and later on I found out I still

need a bachelor's degree to apply for

work visas in Japan. So I went to one of

this is like the doc this is 2000 this

is the do like height. Um so I went to

an online education uh program called

the American College of Computer Science

uh and got a degree there.

>> Oh my god. Yeah. So you're technically a

graduate from that school.

>> Technically. Yes.

>> Okay. So which internship did you get

where you started to work there? Uh so

uh I got an internship uh at to in

Tokyo. Uh so I always uh in from from

first year college I always worked on a

programming job. So I worked at a

company called original sim writing some

simulation software and then um third

year I got into a company in Japan in

Tokyo called Fusion Systems um Japan and

then uh they were writing uh order

execution systems for brokers of uh the

Tokyo stock.

>> Sorry that's a Japanese company with an

office in Montreal or an office in

Canada or no?

>> No no I I went to Tokyo. You went to

Tokyo.

>> Yeah. It's actually an American uh a

bunch of American guys company that's in

Tokyo. Uh so it's like a bunch of guys

were

>> And you're thinking this is an

adventure. I'm going to go and live in

Tokyo for a summer.

>> Yeah. Yeah. I mean I was a college

student and living in Tokyo is like a

you know it's fun. It's dream. Yeah.

Yeah. And uh and the first time you go

there is like it's it's

>> from the future.

>> It's it's cool. Yeah. Yeah.

>> And what kind of software did you write?

>> Mostly order execution software. So the

same software like that moves orders and

buy what drives Binance today.

>> Pretty much. pretty much. So it's the

same same style like actually all the

software I was involved with have no

decision- making.

>> So when you first and were exposed to

this it was not like oh wow I love this

>> this makes sense or was it more okay I'm

asked to write this code and I

understand the concept so let me just do

it. Were you attracted to the subject

matter or you just did it because it was

your job? I first did it was because it

was my job right I was so young I didn't

know what all the different industries

are and actually when I got to the

company the company was giving me a

project on working on dig uh digital

imaging storage systems like know this

basically iPhone photos app but for for

for medical imaging uh for for Nikon

>> but very soon the company's main main

product is the order execution system

right

>> so I was involved in that and then that

became the thing over my career and I

like it uh because um it's it requires

quite a lot of technical expertise

everything is about efficiency making it

go as fast as as possible uh process as

low latency as possible right

>> um that kind of appeals to me I'm an

efficiency kind of driven guy like like

subconsciously and just to double click

on that when you look at high frequency

trading organization the susanas the

jumps they go to such a degree to

basically optimize for efficiency and

low latency all the way down to it's

their own circuit breakers it's their

own physical fiber infrastructure

they're willing to sort of pay the price

to just shave off a handful of

milliseconds on either end.

>> Yeah.

>> How does that manifest in the software?

So when you're writing that kind of

software, how do you actually optimize

for those boundary conditions in code?

>> Yeah. Yeah. So well, there's quite a few

levels, right? The first level you do is

basically you write a software to be

efficient and fast like no no slowness.

Uh uh you want to remove all the

database lookups. So you want to do

everything in memory and then um you

want to reduce any sort of additional

computation. uh you want to simplify the

risk checks pre especially pre-order pre

pre-trade uh risk checks and then the

more advanced versions you move on to

like the FPGA which is a network chip

card that's on the on on the on the on

the network card on the what we call the

ether ether card

>> so that you don't have to go all the way

up to memory and come all the way back

down to the processor

>> so back then when I was like still

writing code like maybe 10 years ago

that round trip is about 100 mill 100

microconds

>> microcs yeah

>> and then um by avoiding that you reduce

down to 20 microconds right

>> and then you move it to physical

infrastructure you want a collocation

right you want to

>> why haven't these organizations like in

the AI world for example with grock our

big observation even 10 years ago when

we were starting the business was this

exact idea which is it's really

inefficient for to sit in a GPU to go

all the way up to HBM to come back down

so let's just take SRAMM and just do

everything here on chip right

>> manage it with C to that technical

problem made a lot of sense and very

very fast for the decode phase of

inference makes a ton of sense Why when

so much money is on the line for high

frequency trading, why did they never

try their own custom silicon? I

understand FPGAAS, but nobody really

went to the point of actually saying

here's a specific ASIC or did they and

we just don't know about it. I don't

think it exists on very large scale. Um

the uh I think the algorithms change too

often. So when you go to hardware like

you want to design your own chip, uh it

it is very efficient. is highly is very

fast but when you want to change it uh

it takes a long time right so when when

you want to reprogram it I think FPJ

already offers kind of the the best

>> best of both the both worlds even FPGA

you want to reprogram it the programming

cycle is much is 10 times longer than

software

>> the company you worked at in Japan was

it successful

>> it's successful you got that company got

sold to a NASDAQ listed company just

before 2000

>> for a lot of money

>> for like $52 million back then so that

was decent money yeah

>> and So, is that when you said, "Hey,

hold on. There's something here." Or no,

was it something else that happened?

>> No. Uh, so at that time I was too young.

I was like 20 something. Um,

>> so you're working at this place. You're

just a coder.

>> Yeah. Yeah.

>> You're a salary man.

>> Yeah. Yeah.

>> In Japanese terms, right?

>> Salary man. Yeah.

>> You're a salary man. So then walk us

through what happens afterwards.

>> So uh that company got sold. They

acquired there was a lot of culture

clashes between the parent company

versus the original company. Um that's

my first experience about you know how

mergers may not work.

>> Yeah. the the two managements were just

clashing and then um uh the the same

partners went to do a different company

uh called building two um but now this

partners the I didn't get any money but

the partners got quite a bit of money

now so they rented a very fancy office

um that company only lasted a year uh it

means that previous success doesn't

guarantee future success

>> in fact

>> um so uh they spent a lot of money had a

very nice office but has zero zero zero

revenue so that folded within a year and

that's 2001 and um so uh and early 2001

I was looking for new jobs and then

Bloomberg was hiring and this is right

before 911. Um I kind of got an offer

before 911 and then 911 happened. I

still haven't moved and then

>> where was this to New York or

>> this was in well I was still in Tokyo

back then and then Bloomberg is in New

York. The offer I was supposed

>> The offer was in New York.

>> The offer was in New York. So after 911

I called Bloomberg say hey is the job

still there? Do you still want me to go?

And they said well do you still want to

come? I was like yeah okay. So then I

went. So I went to New York in November

of 2001.

>> Wow. What was that like?

>> The streets were pretty quiet. Um

>> Yeah.

>> And uh but you know I was fine. I was

you know um New York is a is New York

was quiet for a few months but it became

lively pretty quickly I think. So I

didn't feel too much uh issues.

>> Um um so I then went to New York and

worked at Bloomberg for four years

>> doing exact again the same thing. You're

kind of a salary guy. You're working at

a big company,

>> salary, bonus, maybe some options or

some phantom equity or something like

that.

>> Yeah. So, um I joined as a senior

developer. Uh I was put into a team

called uh tradebook futures. They just

formed this team uh and uh they had a

system that allowed people to trade

futures on Bloomberg, but it wasn't it

was like spread out. So, they collected

that into into into one into one team

>> and still no inkling of like that

entrepreneurial bug.

>> Not really. back then I was like nah I I

worked

>> what were you looking for stability like

why like why Bloomberg being in New York

like what was it

>> I was just a young guy I was like I

think I was like 24 20 24 25 okay

>> so I was just a young guy trying to get

a job you know uh experience different

parts of the world and get and and just

find my way through um I I knew I wasn't

experienced enough to do

entrepreneurship myself right so I was

and I I was working a small company in

Tokyo the company only had like 200

Bloomberg at the time had about 3,000

people. So to me that was a big company.

>> Yeah.

>> And they fancy offices, fish tanks and

free food and everything. Um so I joined

as a senior developer. I got some good

bosses. I got promoted three times in

two years and then I was leading a team

of 60 initially and then kind of grew to

about 80 people. Um and that's when I

became sort of a manager. Uh I no longer

wrote code and I started

>> the worst transition.

>> The worst transition. Right. The worst.

>> So um so that's kind of my Bloomberg

experience. Yeah. So that and I Yeah. So

I had to stay there for four years.

>> And then you quit and moved to China.

>> Yes.

>> How does that happen?

>> I think was wrong like uh beginning of

2005. Um again the same uh friends I had

I made in Japan, they were talking about

starting a new company, a new uh fintech

company and they were in Asia, right? So

they're talking about Tokyo, Shanghai or

Hong Kong. And they said Shanghai is

most likely the most happening place for

the future of fintech. Um we should have

picked Hong Kong. Hong Kong had a lot

more happening since then.

>> Um, so I went there in 2005. So the it

was like five foreigners from a Chinese

perspective. U five Caucasians, four

Caucasians plus a Japanese plus me. I'm

the only one who speaks Chinese and my

Chinese was kind of rusty back then too.

So the six of us went there to do a new

IT start startup in Shanghai.

>> You So all you guys just land there and

what was the idea? So we thought you

know we have all this Wall Street

experience on Wall Street trading

technology experience.

>> So your other friends had they moved to

New York or no they were still in Japan

doing their own thing.

>> Two of the friends were in New York with

me and then um uh the other three were

from Japan right they were there they

always they were so the six of us came

together and uh we wanted to do we want

our idea was uh let's bring the wall

street trading technology into China so

we can service the brokers and exchanges

in China. Um but then so we went they

rented a very fancy office again. Uh

>> wait okay so hold on just

>> so when you guys start this company this

so this is now your first

entrepreneurial you're like okay let's

do this

>> pretty much

>> did you know to even ask the question

like okay guys what's our equity split

what's the cap table did you know any of

these things or you're just like great

let's go do it I'm just assuming it's

one sixth we're equal like how how did

it all

>> it wasn't one6 it was like the top guy

had like I don't know 39 40% and the the

the rest five of us split equally so I

had about 11% % or so.

>> Okay.

>> So, I knew that, but I didn't know like,

you know, all the ins and outs about,

you know, shareholder rights, uh, what

terms. I didn't know any of that.

>> Yeah. Preferred versus common, none of

it.

>> And then I

>> You're like, great, I got 11%. I'm

moving to Shanghai.

>> Yeah. So, I just have 11%. I didn't I

have no idea what common stock is or

versus preferred. So, uh, just went and

then but so I was a junior partner in

this group. And then, uh, once we landed

in China, I start because I speak

Chinese, right? So, I began talking to

potential clients. I went to talk to

brokers. I found out we are registered

as a wholly foreigner owned uh what we

call wolfie uh holy holy foreigner owned

enterprise.

>> Yeah.

>> The Chinese brokers and financial

institutions are not allowed to work

with a wolfie.

>> That's right.

>> U so we found out after we started a

company while we were in Shanghai and so

the company pivoted towards doing um uh

any any any IT system for any for any

company. We can be like

>> work for hire.

>> Work for hire. We can be fix

>> deote. You became deoid. uh not not even

deoid we can be fixing printers or we

can be writing like you know SAP

implementations for you we did all of

that so there's a whole spectrum of

things and so we did that for a few

years and we actually made a living

>> for a few years

>> yeah for for for a few years like uh and

we made a living out of that yeah we we

started we had a quite a number of

automotive clients uh the Shanghai

General Motors uh Shanghai Works Wagon

uh Shanghai first auto mo uh first

automotive they were all clients of ours

and like maybe three or four years in uh

we started having offices in Hong Kong

and then we were dealing with a Morgan

Stanley, Deutsche Bank, Credit Swiss.

>> So it grew so it was it was successful.

>> The company is still around. The company

is still around. So I I left in 2013

after 8 years. Um but the company is

still around.

>> So in the eight years you worked at that

company all in Shanghai.

>> I was mostly in Shanghai, but then I

spent quite a bit of time helping to set

up the Hong Kong office and then I was

also doing quite a lot of work for some

clients in in Tokyo.

>> How big did that company get? I think

even you got to about 200 people again

and it's kind of stayed there for as for

as as far as I know even till now.

>> And so as a junior partner you just take

profits and you share it like

>> Yeah. Yeah. So uh uh well actually I we

didn't take that much profits. Um I

actually invested most of my savings

back into that company and I actually

didn't cash out a penny. Um but wow

>> after a few years the company was uh s

stable enough to pay the partner

salaries that all of our kids go to

international school. So we get a we get

a we get a six figure salary.

>> At that point you had gotten married.

>> Yes. Yeah. So at that point uh uh Yeah.

So at that point I got married when I

was in New York. So like uh Yeah. So and

then u uh Yeah. So we I had two kids.

>> And you had met your ex-wife. How?

>> Yeah. I met her I met her in in in Tokyo

when I first went to Tokyo. So I met her

in 1999ish

um when I when I was first in Tokyo like

doing the interns.

>> Okay. And then um uh she visited me in

New York and then you know we got

married and then uh we had kids now we

are separated or we're divorced in

Shanghai. I had young kids and you know

it was enough salary to put the kids

into into international school and that

was that was good enough for me.

>> Wow.

>> Yeah.

>> So far again

>> nothing here tells anybody that you're

about to go and start Binance.

>> No no nothing

>> nothing. No I didn't know. So then 2013

2014,

how old were you then at that point? You

were

>> uh 20 2013 I I would be 36.

>> Yeah. Mid-30s.

>> Yeah. Yeah. So

>> So again, salary guy.

>> Yeah.

>> Junior partner at this thing. It's going

well. Your kids are in private school.

>> Yeah. Yeah.

>> So then what happens?

>> So then uh I came across Bitcoin, right?

So um well, one of my friends tells me,

"Look, see, you got to look at this

thing called Bitcoin." I look into it. I

was like uh it took me about roughly six

months to fully understand it. So that

was from like roughly July 2013

>> and that's because you read the white

paper and you said I need to read it

again and read it again or

>> Yeah. Yeah, pretty much. And then um

because back then there was the Bitcoin

talk or forum and then that's pretty

much it.

>> But did you see my Bloomberg article in

2012? Is that that had any influence?

>> Unfortunately, I don't I I read a bunch

of stuff. I actually don't remember what

I

>> I'm just kidding. But I did write this

thing and it's funny because I had a

kind of a relationship with Mike

Bloomberg. was kind of not even mentor

like he was just too senior but

>> he knew me he liked me he would invite

me to certain things

>> with Mike Bloomberg

>> yeah with Bloomberg and and then I got

to know some of Mike's team

>> and in 2012 or so they said would you

write an op-ed

>> okay

>> and I was like yeah and I wrote it about

Bitcoin and I said everybody should put

1% of their net worth into Bitcoin and I

said it's basically schmuck insurance

>> and then they published it in the

Bloomberg terminal or whatever and

that's when I got redpilled on Bitcoin

where I was like man it's the most

incredibly interesting technical product

that I had read about and I think the

thing that captivated me I don't know if

you felt this way it was the only white

paper that I read end to end where I

thought this is one of the most

elegantly written pieces of

non-technical pros do you know what I'm

trying to say like it's not

>> something that is like dense and an

archive that is just meant for PhDs

>> you could literally give it to your

sister to your brother to somebody

non-technical And they would understand

it.

>> Yeah. Yeah. And it's only nine pages.

>> And exactly. You know what an enormous

amount of intellectual skill it takes to

do that.

>> Oh yeah. Oh yeah. Yeah. It's much harder

to write it very short.

>> Much harder and elegantly and simply.

>> Yeah. Yeah. Anybody else try to rewrite

that? I think it' be 90 pages.

>> So the friend that showed it to you, was

he a co-orker of yours or no? Just a

random friend in Shanghai.

>> It's a friend. It's a it's a it's a

random Well, not a random. He's a

friend. Uh we don't have any working

relationships. His name is Ron Tao. He

runs uh I guess now Skyline Ventures.

And back then he he was at Lightseed

Ventures

>> of course

>> he was a managing director of Lightseed

Ventures in China.

>> Okay.

>> So we play we have a poker house game

like you know small stakes. Um a bunch

of uh I a bunch of entrepreneur like

struggling entrepreneurs versus like

VCs. Uh so the VCs have all the money

and all

>> David versus Yeah.

>> So but you know it's it's a fun it's a

fun game. It's not a very serious game.

So on in one of the poker games uh Ron

says CD you should look at this thing

called Bitcoin. I was like, "Okay,

Bitcoin." Okay. So, uh, and so we talked

about it a little bit and then Bobby

Lee, uh, who was at the time was working

for Walmart, was just about to quit

Walmart to join BTC China to become

their CEO. And, uh,

>> uh, as part of that deal, Bobby said he

will bring Ron in as an investor,

Lightseed into

>> into BT BTCC

>> into BTCC. So, that's in two uh, July

2013. I was like, okay. So, they two

guys are pretty serious about this. So I

had lunch with Bobby the next day and

Bobby said put 10% of your net worth

into Bitcoin. He said there's a small

chance you will go to zero then you lose

10%. Uh there's a much higher chance you

will go 10x and you'll double your net

worth. I was like okay sounds pretty

serious. So u that's when I started

learning about reading the white paper

more carefully. Took me six months. Uh

so it was till the end of 2013 I started

like I'm I'm convinced now. I'm ready to

go. But then Bitcoin went from $70 in

mid 2013 to like $1,000 by end of 2013.

So you already went more than like 15x.

>> How did that make you feel?

>> I was like, I'm I'm too late.

>> I was like, I wish I got in early.

>> Yeah.

>> Cuz when back then, right? No. Doesn't

matter when you get into Bitcoin, you

always feel late.

>> Yeah.

>> Right. Because everyone you talk to has

in the Bitcoin industry has bought

before you.

>> And did you talk to anybody while you

were learning about it to say like you

have a community in in Shanghai? there's

a comm there's a very small community in

Shanghai and then I was basically

talking to anybody in the world that's

that's willing to talk with me uh and

then I had a couple friends in Taiwan

they used to they they worked for TSMC

back then uh because and then they were

trying to do a mining chip uh for for

Bitcoin so two of those guys left TSMC

try to do this startup startup never

never really took off but that was one

group of guys I was talking to um there

was uh another couple they were mostly

minors there was another guy called um

his nickname is fish uh silver fish uh

in China. He's like a big minor. He's

runs the F2 pool even today.

>> Oh sure.

>> So those guys were based in Hondro um

you know I went they came to Shanghai I

talked to them etc. So there was a group

of guys that you talked to and then uh

the biggest thing was um in December

2013 December 13th 2013ish there was a

Bitcoin conference in Las Vegas. I flew

there um to meet everyone everyone in

the industry was there. Uh there was a

200 people conference. Uh Vitalik was

there, Matt Rosak was there, Charlie Lee

was there, uh um bunch of guys were

there. Um and the same same guys still

today. Um but and then at the time just

before that it was the Silk Road arrest

of uh Ross

>> Wubber.

>> So the media was like no this Bitcoin is

only used by drug lords.

>> Um and when you go to the conference it

was like a bunch of kids, a bunch of

geeks geeks and they're very nice

people, right? So you talk to Vitalic,

you know, you know, he's a very nice

person.

>> Were you still working at that company

while you were doing all of this

moonlighting?

>> Yes. So this is what this is kind of the

>> You tell your partners, hey guys, I'm

just going to go to Vegas for a couple

days. I'll be back.

>> Pretty much. Yeah. Yeah. And then um and

then when I got back, I told the

partners, I we should do a Bitcoin

payment system because Bit Pay was kind

of the big player back then. Uh Bit Pay

just raised $4 million US in 2013.

>> So they was kind of the uh the large

player

>> actually in the employee.

>> Can I tell you a very funny bit? I have

two Bit Pay stories.

>> Sure.

>> I was very focused on trying to prove

the transactional capability of Bitcoin.

>> Yeah.

>> I went to my local car dealership

>> and I bought a car with Bitcoin using

Bitay in 201 12 or 13. Wow.

>> That Range Rover is probably $90

million. And then even more stupidly,

there was a real estate development in

Lake Tahoe.

>> Yeah. called Martis Camp. Beautiful. And

I had owned a couple of lots and I said,

you know, it would be great if I

actually could prove that you could buy

real estate with Bitcoin.

>> And I called the guys at Bit Pay and

they were like, yeah, we can facilitate

this transaction. No problem. I bought a

piece of land. And then again, I thought

this is an interesting story. And the

Wall Street Journal wrote about it. And

now that piece of land is a billion

dollars,

>> but you you cannot calculate this way,

right? So

>> it's easy. I calculate it this way every

day.

>> You can't calculate it that way because

the stupidest purchase ever.

>> No. No. No, no, no. That's this that's

the bucket of money mentality, right?

>> No, no, no. It's true.

>> Right. So, even if you didn't use

Bitcoin, you would have used some money

to some

>> Exactly.

>> buy the land. You could have used that

money to buy Bitcoin.

>> Yeah.

>> Right. So, Yeah. Yeah.

>> So, you're like, "Hey, we should do a

version of BitBay."

>> Yeah. Yeah.

>> And your partners are like, "What are

you talking about?"

>> Exactly.

>> And now, at this point, you still hadn't

bought any Bitcoin.

>> No. At this point, like I had like maybe

one Bitcoin.

>> Yeah.

>> Yeah. And one Bitcoin is like only a

thousand bucks back then. Yeah. So,

Yeah.

>> So, then what happens? And then so but

and then so I tell my partner look I

think this is this is the biggest this

is the biggest thing in my life right so

when I think there's three fundamental

back then I realized there was like two

fundamental technologies in my life this

the internet I was too young to do too

much with it and there was this Bitcoin

thing and I wasn't I was 35 36 I wasn't

going to miss it the next thing that's

going to come along is going to be 15

years later

>> you feel old when you go to Vegas and

you see all these young 22 year old kids

and you're like I missed it did you

think that at any point or

>> no 35 36 is still okay. Okay. So, it's

still like doable. Uh you know, you

don't feel super old. Today I feel that

>> but I thought the next thing that that

will come will be 10 15 years later and

with that's AI, right? So, today I say

like there's three fundamental

technologies in my life. But back then

like that's the that's the that's the

thing,

>> right?

>> So for me it was very clear I got to I

got to do something in this industry,

>> right?

>> So u and uh so I told my partners look

I'm going to I'm going to I'm going to

quit uh and I'm going to do work in the

Bitcoin industry. That's what it's

called back then. And then um uh and

then I was I also need to buy Bitcoin

and I don't have many money so um I

don't have so I just I said look I'm

going to sell my apartment in Shanghai

and then buy Bitcoin but selling the

apartment takes time. So it took me like

a a solid few months to sell it and it

was it was only

>> you sold it where did you just got a

rental apartment?

>> I sold it at uh at the time actually my

family also moved to Tokyo. So my family

moved to Tokyo. We lived in a rental

apartment. Um so

>> in Tokyo

>> in Tokyo. Uh and then I was traveling in

Shanghai. So that's kind of the time I

started moving started separating from

uh from the from from the family as

well. So I was spending a lot of time

traveling,

>> right?

>> And uh so I sold the apartment and for

roughly $900,000 like just under a

million bucks. Um, and then started

buying and I got paid in trenches

because, you know, you get a first down

payment, you got paid in trenches and

every trench I get, I just buy. The

first trench at $800 and then Bitcoin is

dropping $600, $400. Kind of averaged to

about $600.

>> Incredible. Yeah. Incredible.

>> So now you have your Bitcoin position,

but you still don't have a job.

>> Yeah. Well, I was looking for a job at

the same time, but you were looking for

a job in the Bitcoin industry or you

were just looking for any job

>> in the Bitcoin industry. That was very

specific. Um, it didn't take me that

long to get a job. Uh you like the gap

was pro from the time I said I'm going

to quit until I finalized the job was

probably about two to three weeks.

>> Oh wow. Yeah.

>> And so who hired you?

>> I first discussed with BTCC Bobby he

wanted to hire me and then um uh but

then uh blockchain info came along. Uh I

bumped into Roger Ver so and then he at

the time blockchain uh blockchain info

was I was the third person to join the

blockchain info team. There was a uh Ben

Reefs who's a founder and there was

Nicholas Kerry who was just the C hired

the CEO

>> and I was like the third guy in so I was

like VP of engineering because Ben we

want to reserve the CO title for Ben.

>> So uh uh so yeah I joined I I joined uh

blockchain info. I flew to uh York in

London like three hours north of New uh

London. Um uh I spent some time there

you know figuring out what to do. Yeah.

>> And how did that go?

>> Uh that didn't go very well. We expanded

the team to 18 people and then um Peter

Smith joined uh as a CFO wanting to

raise money for blockchain evil.

Coinbase just finished raising at

raising around at 30 raising $30

million. Um and that was a big one in

the industry back then. Um Peter Smith

somehow maneuvered himself into the CEO

position pushing like Nicholas Kerry to

the product manager kind of role. Um but

the culture kind of changed a little

bit. So um uh I left um a bunch of the

developers I hired left um and then um

Ben Reef Ben Reef sold quite a lot of

his position also left in a few months

later. So that was that was my so that

was only like a few I think I was only

there for like uh six seven months. So

that didn't work out too well. Uh but I

learned a lot uh from that experience.

>> Yeah. You learn what not to do. No, they

all know like blockchain info when I

joined the the Baron Reeves said look we

have no company we have no office

everyone works remotely we just pay

everybody in Bitcoin and so that's

something I learned from that company

and I still look that's still very

heavily used in Binance today

>> so I learned a lot I also learned that

you know that company the whole

marketing they at the time blockchain

info was the largest user platform in

the industry right so they had about two

million wallets uh more than Coinbase at

the

And um uh the entire marketing was one

thread on bitcointtalk.org

one thread. The thread is 150 pages. Um

Ben Ree just replies to that thread and

that's how you grew to a 2 million user

platform. I was like okay so you can do

some you can do quite a lot of guorilla

marketing to be successful.

>> Wow.

>> So I I learned a lot. U but the culture

changed a little bit. it wasn't fit for

for me and then I I left and then that

was when um

uh hired me into into okay coin. Yeah.

So I he said look why are you working

for this wallet company your experiences

dealing with order execution exchanges.

So so he hired me there

>> as a developer

>> as a CTO uh

>> as a CTO.

>> Yeah. Um so uh yeah so in the process I

think BTC China helped me again.

Uh so you know I was kind of looking for

a job again right so I left and then um

uh uh was talking to me and Bobby Lee

found out and Bobby Lee meant so okx

okay coin back then uh will offer me 5%

equity um and then for uh sorry uh BTC

China came along and offered me 10%

equity and then OKCoin matched it within

three hours and then I was debating

between Shanghai and Beijing and I

decided to go to Beijing to join OKCoin

back then uh Hu at that time had 1%

equity Uh so she hired me to be like the

the the the bigger sort of partner in

the business.

>> Wow.

>> Um so that's that's how I went to OKCoin

um for about 8 months or so. Um that

didn't last long either.

>> Yeah. Because

>> I think there were also culture

differences um at OKCoin. Um uh there

were some stuff that I didn't agree

with. Um both in terms of like you know

simple examples like how they run

promotions, how they how they do fee

discounts uh where you have to ask for

it like they they advertise a fee

discount but you have to ask for it to

get it. It doesn't apply to everybody

even though they advertise as such.

>> So small things like that. And then um

so yeah, so that was in early 2015 I

said no I'm I'm going to leave. Um, so

that's kind of a uh so that lasted for a

few months uh in 2015. Yeah. 2014

mostly. Yeah. So how do we get from

there to Binance?

>> So 2015 um I I with a couple of my old

colleagues said we're going to do a

Bitcoin exchange in um in Tokyo in Japan

because this is uh a year after

>> after Mount Gaus and all that. Yeah.

>> Yeah. So there's a vacuum in Japan. So

um we got two developers that came to me

on the same day I decided to leave

OKCoin. they came to me said look we

somehow they also quit their pre

respective jobs. Um I said okay well why

don't with the three of us do something

and so I we said okay so I will I will

be the CEO and then I'll be the big guy

uh with more equity and then I'll be uh

responsible for raising u I and I was

paying them a salary out of my own

savings um and I wasn't taking anything.

So the two developers uh we we whipped

up a demo very quickly. We downloaded an

open source software for an exchange and

then uh we tweaked the UI to be a little

bit sexier and then uh we hooked up.

>> You just forked an open source project

like this is our this is Binance.

>> No, we we didn't say it was Binance.

Yeah, this is before this is before

Minance.

>> Yeah.

>> And we didn't say we I was very

transparent. I was like this we whipped

up this demo up in two days or in a few

days.

>> Um and this is a demo that we can show

you. But this is not our

>> the ultimate product. It's just it's

just a proof of concept just Yeah. So um

it's like uh yeah so and then but and

then we had a script that took Bitfinex

uh market data. Bitfinex was like a the

large exchange back then and we just

kind of copy their order book and the

order book was flashing there's trades

going on. So it was a very lively demo

and when the investors saw that it was

like wow this is good technology

but it's not just a demo it's it's it's

a when they ask me questions I can

answer in very deep ways right when they

ask me like you know how do how do you

structure this to be a fast uh exchange

we I can talk about know in memory uh

matching um uh optimizing database all

all the all the stuff you've learned

>> yeah so I can go really deep when they

ask questions right so the my my

knowledge is there

>> right

>> so they were like uh They were like,

"Okay, this technology is cool, but you

could you won't you won't be successful

running a crypto bitcoin exchange in

Japan. You don't speak Japanese, right?"

I was like, "Okay, they have a point."

Um, so they said, "Why don't you sell

the this technology to other exchanges

because most of the Japanese exchanges

don't have very good technology." Um, I

was like, "Okay." So then I went to talk

to a few of the exchanges. Like

literally two weeks later, we signed a

contract with one of the with one of the

exchanges and then they paid 30 $360,000

for the for the system. Uh so they made

a down payment of 100 $180,000.

Um that was enough for me not to pay

salaries anymore. So I was happy with

that. So uh we pivoted from a wanting to

run a our own Bitcoin exchange to a

exchange systems for provider.

>> Yeah. You're selling software.

>> Uh we we're selling software. And then

um in July 2015, a bunch of Chinese uh

uh companies came to us saying they want

systems for

>> Can I just say by the way, sorry to

interrupt you, but it's really

incredible because there are so many

founder stories when somebody says,

"I've started a company." And then

somebody says, "Well, how much is it

worth or how successful is it?" And you

know, let's just say Binance is a $200

billion company,

>> probably less than that, but

>> it's in the neighborhood.

A lot of people think that there is some

incredible origin story that is like

lightning in a bottle. But so often than

not, the story is more yours, which is

this. It's kind of like moving along,

meandering, learning things, trying some

other things,

>> this non-obvious iteration, and then all

of a sudden

>> things kind of catalyze. But even then,

you still don't get the right form

because you're licensing it really. And

people just misunderstand that this is

actually more what entrepreneurship is.

It's the resilience and the grit to just

keep grinding.

>> For sure. For sure. I think most most

people idealize like, you know, um

entrepreneurship that they just hate it

and they they they

>> it's like the Facebook story. You hack

it together in college and oh it's now a

million users.

>> It's Facebook is is is Microsoft, right?

Exactly. And also Google this three are

like you know college uh garage and they

just

>> Exactly. Even but the reality Binance or

Tesla it's like a grind. It's it's a

grind and it's a grind.

>> You have to like go so many different

ways

>> and it wasn't obvious from the

beginning.

>> Yeah.

>> Right. So I think those three are the

exceptions that kind of just hit it from

day one.

>> Exactly.

>> Um but then that kind of shaped the

people's perception like 99% 99.9% of

other business successful businesses are

not like that.

>> Right.

>> Right. So if you look at now any other

successful company. Yeah. So the same

same here.

>> So get us to the founding moment.

>> Yeah. So we did

>> so you're licensing the software.

>> We licensed the software. We that

business went pretty well. So, we've had

like 30 different exchange clients.

>> Wait, no way.

>> Like over over like

>> over multiple years.

>> Over two years. In two years, we signed

up.

>> Yeah. So, this is a multi-million dollar

>> Oh, yeah. Yeah.

>> licensing business.

>> Yeah. So, and it's a SAS business,

right? What we call exchange as a

service uh business. So, we charge a

fixed monthly fee every month. And this

is platform business is paying us. It's

very steady business. Every new client

we So, every new client increases the

the revenue. So, every new client is

like a step up.

>> Exactly. So it's a very actually a very

very good business model. But then in

March 2017 uh the Chinese government

shut down most of our clients. Uh and

then um and then by May we're like

>> right and they don't touch you because

you're the software vendor

>> with a software vendor. Exactly. We

don't run any business. So with a

software vendor so um but then our

businesses we don't we have no clients

right. So uh we lost our clients and so

by May we were like okay we need to

pivot. Um well by April May we were like

figure out how to pivot. Um by end of

May we was like okay uh actually three

guys who worked for me said they want to

do a Polon next copycat. Polex was the

biggest uh exchange back then. Um and

then I said let's let me invest. We have

some extra cash. Three days later they

want to do some onchain chat trading

software. Was like no we're not going to

invest in that anymore. Um and then I

said well why don't we do that? We have

the exchange system already. Uh we still

need to customize it to do a cryptoto

crypto only trading.

>> My gosh. So in May we said okay uh we're

going to do a crypto we're gonna do an

exchange again. Um the team said fine uh

sure.

>> How big is the team at this point?

>> 20 people. So um and we had tech people.

We don't have marketing because we are

to be business right. We we have we have

two sales guys two sales guys plus me.

>> Um and then uh we said well now we can

run our own let's let's do our own

cryptoto crypto exchange. Um so and then

so that was the end of May and then June

1st to June 10th uh there was a guy who

who was a BTC co-founder uh Link he ran

an ICO in China he raised 15 million US

dollars in in 10 days and with and then

I looked at him I was like I was like he

only had a white he only had one

document and one website no product

nothing he raised $15 million US if if

he can do that I might be able to do

that too

>> you need aded venture funding you're

like if I get the $1 million. I can

build out a team. I can invest in some

marketing. I can be in the J curve and

not feel the pressure.

>> Exactly. Yeah. So, originally we were

going to go to the VC funding route,

right? But then when I saw that, I was

like, well, and and and everyone talking

about ICOs back then. Uh I went to like

I went to a conference uh mid June uh

2017 and everyone was talking about ICO.

Everyone's like, CZ, you got to do an

ICO. You got to do an ICO. So, um by mid

June uh June 14th was the date. And then

I said, okay, called the team said we're

going to do an ICO. write a white paper

and then by

>> and so did you have a name at that point

like in the Bitcoin community or in the

crypto community either in China or in

Japan or somewhere

>> I had a little bit of a name even

working at blockchain info uh uh quite a

lot of people know me uh blockchain info

was the most popular platform back then

right

>> and OKCoin was also like I was a CTO I

was quite I was quite active on social

media um I was also kind of managing

their international markets non-English

speaking or non-Chinese speaking markets

because nobody else I was the best

English speaker on that me even though

my English is not that great but uh so I

had a I had a little bit of a a name uh

uh people know uh people know me in the

community

>> because you needed a bit of a name or

some kind of pedigree to actually do an

ICO at this point.

>> Yeah. Yeah. Yeah. So, but this is a

advantage of when you get involved early

in the industry like you go to a few

conferences like there's 200 people and

you go to like by the second time you go

there people know you right

>> but the third time is people like oh you

know

>> you're the expert already right so u so

I had a I had I had a bit of a

reputation uh so I thought that link

quite the guy who did the ICO in China

he's quite well known in China but he's

not known internationally I have a

little bit of both so I said well I can

probably do an ICO and raise the same

amount so we Uh, and um,

>> so who are the buyers of the Binance

ICO?

>> To be honest, even to this day, I don't

know.

>> Even to this day, you don't know,

>> right? It's like I think,

>> but are they Chinese? Are they Japanese?

Are they people from all around the

world that kind of knew you? Was it that

your white paper was really good?

>> Okay. So, I think in terms of

demographic, it's probably like 80 the

ICO purchases were probably 80 80 to 90%

Chinese. And there were some like

international guys who who bought it.

Uh, and I think the data shows that

there was about 20 20,000 people who

bought in the ICO.

>> 20,000 people.

>> 20,000 people. So, and this is like a

brand new brand. Uh, some people know me

in the industry and that was it.

>> So, even though the exchanges were put

out of business in China,

>> yeah,

>> the ICO was allowed.

>> No, the ICO wasn't banned back then.

>> Wasn't banned.

>> Yeah.

>> It was not not allowed.

>> It was not not allowed. Exactly. So, let

me let me let me let me just make one

clarification. The exchange clients that

that we were serving were mostly stamp

uh cultures exchanges, not crypto

exchanges. Okay.

>> Crypto exchanges were not banned in

March. Crypto exchanges were banned

after we started.

>> I see.

>> So uh that was in September. We're

talking about like June, July kind of

2017.

>> Wow. You're really threading a needle.

>> Yeah. Yeah. So I we didn't know that

that B was coming. We just thought like

you know those

>> How much of the company did you sell?

>> No, we didn't have we we just the coins.

>> We launched the token.

>> You had to do no equity participation.

There's no there's no equity that

there's no equity uh involved. So we

just we launched a new token B&B is

still there today

>> and then we said look we're going to

sell uh we're going to sell 60% of it

for $15 million

>> roughly. Right. So uh because we're

tokening bitcoins

>> and what were the original tokconomics

that you designed for the B&B token?

>> Well, we said a bunch of things but the

main one that was going to be live very

quickly was going to be uh if you hold

B&B you receive 50% fee discounts when

you trade on Binance eventually the

platform that gets launched. Um, that

was the main thing. But we also said,

look, it's going to be a it's going to

have eventually it's going to have its

own chain, it own decentralized

ecosystem. There's like three or four

things.

>> So then you guys must have been

ecstatic. You're like, wow, we raised 15

million bucks. We're now going to launch

this exchange. But then September comes

around and then exchanges themselves.

So then what do you do?

>> Yeah. September comes around. September

4th, the like seven different

departments of Chinese government issued

a memo together saying that number one

exch crypto exchanges are no longer

allowed in China. ICOs are no longer

allowed. Mining is not allowed, crypto

mining. Uh we said, well, we're gonna

move. Well, we said uh we have to move.

Uh by then it was clear that even while

at the time China was one of the do the

the largest user base, uh they have like

30 something% user base from China, but

we still have like 70% from the rest of

the world. We said, look, if we cut off

that 30%, we can still survive. We can

we can we actually survive pretty well.

>> Yeah. Um, so we said, well, I just said,

"Look, let's move. Let's move. Uh, let's

move to Tokyo."

>> Back to Tokyo.

>> Back to Tokyo, right?

>> You love Tokyo.

>> I I I've been I've been back in and out

of Tokyo. I know it.

>> And by the way, at that point, do you

speak Japanese as well?

>> I speak very little Japanese. Uh what I

call taxi Japanese. I can I can say

like, "No, thank you. Go left, go

right." In a restaurant, I when I order,

I say this, this, this, not the not the

full menu names.

>> Yeah.

>> Sushi, I can name most of them.

>> Okay.

>> Yeah. So, that's my Japanese level. But

you know I know Japan, I know Tokyo. It

wasn't it's not like a new country for

me, right? So I said like let's move to

Tokyo. And we had like 30 people then,

right? So

>> and everybody moved.

>> Everybody moved.

>> Wow.

>> Back then um eight years ago I think

very like maybe one or two of the people

were married. Uh and nobody had kids. Uh

so it was like a very easy move for the

team.

>> Yeah. Uh so it's everybody just packed

up and moved. I remember one girl cried,

one product manager, she cried because

her her boyfriend is in is in China. So

she cried but she moved with us and u

she's not married to her boyfriend. So

anyway,

>> incredible.

>> So yeah, so we moved to Tokyo like u

when China did that um and uh our

platform continue to grow. Yeah.

>> So when you first launched Binance, was

it an instant hit or did it take energy

to find that product market fit? at

first few zealous users that would tell

everybody else like how did the verality

start? How did the liquidity really get

built?

>> So, Binance I would say the product was

growing pretty well but the token price

went down uh from ICO price it went down

30 40%. It took about 3 weeks to

recover. Uh so, uh when we launched the

product uh because at that time crypto

is still pretty hot. I think we the

product market fit was there. Um it

wasn't a new idea. It's just a cryptoto

crypto exchange. So then the ICO was

critical then, right? Because these

people say, "Well, I own this token now.

I can trade at a fee discount."

>> Yeah.

>> So that's why I'm going to choose

Binance.

>> Yeah.

>> But was it also architected better? Was

it materially faster or more reliable?

>> Yeah. Yeah. For sure

>> it was.

>> It was. So back then uh when we launched

you can even even using your eyeballs,

you can see that placing an order on

Binance is so much faster than on

competing platform.

>> And so the performance of of the

exchange system was visible. Back then

2017, who were the big platforms that

you were competing with?

>> There was Polonex, Bitrex were the

biggest ones and then there's a few

Chinese ones. There's Hobi, OKX, uh,

OKCoin back then. Um, and then in the

Western world, Coinbase was there. Um,

Gemini was Gemini wasn't there back

then. Um, Gemini was later. Um, so

Bitstamp was there. Uh, Bitfinex was

there. Um, now they're kind of really

really small.

>> So you're now in your late 30s.

>> Yeah. Yeah.

>> And this thing is working.

>> 40s now.

>> 40s, sorry. 40s. How did you internalize

the success? You're like, "What is

this?" Like, "What what's happening?"

Like, "Are you saying that to yourself

or

>> Yeah, there were some really surreal

moments where you were like, is this

real?"

>> Yeah.

>> In a good way. Said like, "How like

what's our revenue?"

>> She I forgot the number, but she said

like a couple a couple hundred bitcoins.

Like, that's crazy. We can't be making

like are you sure? She's like, "Yeah,

we're sure." Like, "No, this number

can't be correct. We must be off by like

a magnitude." And we double check,

double check, triple check like correct.

I was like, that's crazy. And then there

was also a period where three weeks in

uh when the B&B price was recovering. So

B&B ICOed at like about 10 cents. It

dropped to like 0.0 uh up dropped to 6

cents. And then um uh Hi join, we

announced Hi joining and then for the

next two three weeks um every time I you

know you go to sleep, you wake up the

token is up 20%. You go to a meeting

come up the token up 20%. You go to the

bathroom, come back, and tokens up 20%.

>> I mean, it must have been very quick

where you're like, wait a minute, I'm

rich.

>> That came a little bit later. That came

in early 2018, about six, seven, seven,

eight months in. Forbes put me on the

cover.

>> Uh, that's when like, well, I said,

well,

>> how did they even know to find you at

that time to put you on the cover?

>> I actually don't know, but Forbes was

doing a crypto edition. I see. So with

all the crypto guys and then um they

already had a picture of Italic doing a

fancy hand gesture which is really cool

picture. So um yeah so uh yeah so they

they invited us they they contacted our

PR department which maintains contact

with them uh which is really team back

then um like team of four or five girls

um and H says like well Forbes want to

do a special feature with you and take

some photos I think you should go. I was

like, I don't want to go. But I said,

we're a new brand. Forbes can still help

us, you know, uh, increase the brand

>> with awareness. Yeah.

>> Yeah. Yeah. So, I said, okay, fine. I'll

go. So, I went to do the photo shoot.

That was like my first photo like to put

makeup on me and then the first time put

makeup.

>> Cy, what is what is money?

>> Well, is it important? I mean, don't

take this wrong way, but

>> you got rich old.

>> Yeah. Yeah.

>> So, did it matter at that point? What is

money when you're in your 40s and you

make it?

>> It still matter. Uh, but money is not

everything. I think I was old enough

that there's a couple things that

happened to me. Number one is I was

older as like 40ome. So I'm not like a

young 20-year-old that just you know

Lambos, big parties.

>> Too old for that. Uh so I have also my

personality is quite stable. So I don't

get too excited on things.

>> Um also the other thing not to brag but

uh I went from like a barely financially

free to like know cover forbes and I was

like wait a second like how how how rich

am I? I don't even know. I don't like

when I look at my wallet nothing changed

like Forbes Carver nothing changed for

me. Um but then people say look now you

might be a billionaire. I was like am I

really a billionaire? Like it doesn't

feel that way. I was like even like a

month ago like not a month like at that

time when when we fled well when we left

China to go to Japan uh I booked economy

classes for a redeye flight and he was

like no maybe we should upgrade to a

business class so we can lay down and

sleep. Okay that makes sense. That's you

know so like I have those kind of

habits. So uh when you make money

successively like you know you from one

from 1 million you become 10 million you

might want to buy some fancy cars from

to 100 million you might want to buy a

you know some yacht or something to a

billion then you have I didn't go

through that stepwise process. I just

went from like a relatively okay kind of

thing to like you're on the cover of

Forbes.

>> Yeah.

>> So um and so I didn't develop quite a

lot of those habits.

>> What does it what does it mean now? Now,

I mean, depending on the day,

>> yeah,

>> you're a deca billionaire or a

centiionaire. What does it all mean?

>> I it doesn't mean very much to me. I

think money is two things. Number one,

you you have to take care of yourself.

You have to have food, shelter, you

know,

>> which is very minimal amount of money.

>> Very minimal. Like you don't need that

much for that.

>> Yeah. People can confuse themselves and

create all kinds of complexity, but it

doesn't take much.

>> It doesn't take much. Um, so that I for

sure have. So, I have I have a very I

don't have a luxury life, but I have a

very comfortable life, I think. Um, and

then the other

>> Sorry, what does that mean?

>> If you look at my house, my my house

like the living room water leaks every

month or so because the the house is too

so old. But that's the house that has

that's the right size for me at right

now. Um, no, it's not. We'll just fix it

whenever it leaks. U, so that that still

happens like that happened a month ago.

So like people think I live in a very

fancy house, you know, all this other

craz,

you know, it kind of fits all my family

members. Yeah.

>> Um, but it's not a it's a old house uh

that I bought third or fourth hand, but

it's it's in the right location. It

works for me. It's in the right

location. It's functional. Um, things

break once in a while. It's fine.

>> Would you say it's because you're

practical or is it just because you're

just not moved by

>> I'm function driven.

>> You're function driven.

>> If it functions, I'm okay. I I don't

care about the fanciness. I don't care

about style. I don't care about colors.

I don't care about glitting gold. And if

it's functional, I'm okay.

>> Right. So, uh, if it if it solves the

problem, I'm good.

>> Do you ever have bouts of insecurity?

>> Uh,

not really. I'm I I know my weaknesses,

so and I learned to deal with it. So,

uh, I'm not I hope I'm not super

arrogant. Uh, so I don't think I'm

arrogant.

>> I've only gotten to know you in the last

couple years.

>> Yeah. I saw videos of you, I think it

was in the late teens, early 2000s,

and my immediate reaction because that's

always been my struggle is sort of these

bouts of insecurity, ego. I thought,

man, this guy's really calm.

>> Yeah. I'm I'm I'm calm.

>> Yeah. So, I described this way.

>> Very well reggulated, very self-aware,

it seems.

>> Yeah. Other people's emotions may go

like this like happy, sad, happy. I'll

feel happy, sad, happy, sad. But my ampl

amplitude,

>> the amplitude is very moderated

>> is narrower. Yeah. Right. Yeah. So,

>> so it just allows you to manage in many

ways. I mean, success is somewhat

illusurary. If you're like working on a

problem, nobody knows the toil.

>> Yeah. Yeah. Yeah.

>> Nobody really wants to hear about the

toil. They want to have a very simple

way of pointing to something and say,

"Oh, wow. Look at what you have." But if

you're working and you have no time to

enjoy it,

>> nobody understands that, you know. Yeah.

>> Okay. So, you launched this thing, it's

going bananas, but there were some

hiccups.

>> Yep.

>> Do you think that you

got too addicted to the growth at any

point?

>> I wouldn't say I was addicted to the

growth, but I was addicted to the work.

>> Okay.

>> The work was actually very satisfying,

very rewarding. But, what was the

average day for you? What were you

trying to do? I was basically doing like

20 plus meetings a day like scheduled

calls or meetings and then plus other

random stuff and then having to respond

to people on Twitter and uh stuff. So um

but it was very rewarding because um

it's there's a sense of fulfillment that

is very hard to describe. It's not the

money, it's not the growth.

>> Yeah.

>> Uh it's uh you know

>> so what Yeah. What was it when you were

running Binance?

I don't know if you do this, but some

sometimes people fixate on the leading

indicator like revenue is a lagging

indicator, right? Revenue and profits

are just they're here. That's from six

months ago, a year ago.

>> Yeah.

>> Manifest today. What was your leading

indicators? What were the north stars

that you really cared about that said

this is the health of the system?

>> Yeah. Yeah. I think it's really daily

active users. It's not trading volume.

It's not revenue. Why DAO versus those

other things? I think as long as you

keep helping serving more users um then

you're you give them value. So I believe

a product is valuable when people want

to use it.

>> So the more people who wants to use it

even if your revenue is zero you have

you have value. So any product that

people use the more people you use it

the higher value right? So that's kind

of always my philosophy. Whereas

uh you you can optimize for revenue, you

can optimize for profit shortterm and

you can lose the long-term growth. But I

believe long-term if you have a large

number of people using your platform,

that's where you create value. Not just

for yourself, you also create value for

your users. People choose to use you

because there's a value in using you,

right? So that's kind of my my my

northstar. And

>> also knowing that related to that was

knowing that hundreds of millions of

people are using us, we help them,

right? So the way I view is if they pay

like you know a commission fee that

they're willing to pay because we we we

must have given them some higher value.

>> One of the double-edged sword of the DAO

>> is that some of those DAO are

bad actors.

>> Yep.

>> When was the first inkling that you had

that that may be a problem and that you

have to take that seriously?

>> It was like I think

>> what does that first meeting look like

where they're like CZ I have good news

and bad news.

>> Yeah. Yeah. I there's actually a very

clear point. I think it was like

Christmas day January 1st or like you

know New Year day January 1st 2018. So

this is like six five months after you

know we we were kind of large uh well or

five months after we started and we're

kind of we were number one uh exchange

already on that New Year's Eve uh

December 31stish uh 2017 a US Homeland

Security guy reached out to me. Um his

name I think is Joseph. Um I always

remember his name is Patrick or Joseph.

I'm not sure which one.

>> Okay. um he wrote an email and then I

got the email and said like well he

wants to he wants our help to help track

some hackers who may have moved funds of

the Ether Delta hack. Either Delta was a

decentralized exchange back in 2017 that

got hacked that went down. Um so this

guy who works for the US government uh

emailed us and I I didn't know how to

deal with it. Nobody on our team knows

how to deal with law enforcement. So um

I you know got a couple guys to huddle

up together say how how do we help this

guy? Uh and then we gave the information

that he requested. We verified who first

we had to verify who he was. And then um

uh and then afterwards he thanked us uh

and then I said, "Hey, um Joseph, can

you recommend somebody that we could

hire that can interface with law

enforcement in the future?" He

recommended someone, but it the guy was

based in the US and we don't have a US

entity. We we couldn't hire anybody in

the US back then. So we kind of had to

let that go. But that was the point. It

was like um New Year's Day. Uh I

actually remember

>> where you were like this is going to

happen more

>> obviously

>> invariably of large numbers.

>> Yeah. Yeah. So that that's the day when

I realized okay look we need to we need

we need to have somebody who has

experience working with law enforcement

>> and so what did you do?

>> So we we eventually hired we hired more

guys. Yeah.

>> Okay. Yeah.

>> Obviously like you're not looking at the

transactions. So you wouldn't know. But

if we fast forward a little bit, the

claims that then the US government under

President Biden made at you

was essentially that people like Hamas

or people like other organizations were

using Binance and you didn't do enough.

>> Yeah. So uh on this point I may have

some legal restrictions on what I can

say and cannot say about know the plea

the etc. So I I'm not a lawyer but I'm I

try to stay very clear from that. But

overall though, I would just say um the

Biden administration overall is quite

hostile to crypto. I mean they openly

announced war on crypto. Yeah. Right. So

uh it's good to see this new

administration change 180 degrees. I

think that's this is good for America.

>> Yeah.

>> Uh this is good for the world.

>> Yeah.

>> So uh I think it was I wouldn't blame

the previous administration, but I think

they just didn't understand.

>> Why do you think that they were so

hostile to it?

>> It's fear of the new as that as simple

as that. uh I think they probably in

their heads uh there's some degree of

let's not disrupt the current financial

system the banks whoever else um there's

probably a lot of lobbying from those

industries as well to them so that kind

of brainwash or affect the thinking

however you call it

>> so that's human nature I mean if you

think about it it's understandable it's

not ideal but uh it's understandable

>> so you're running the exchange things

are going well from 2018 2019 2020

>> it's kind of like you're really coming

into your own.

>> Yeah. Yeah. Yeah.

>> You eventually opened a US entity.

>> Uh yeah, in 2019. Yeah.

>> And why did you feel the need to do

that?

>> So 2019 there was some news about no US

governments basically in my layman words

chasing BitMax. There was some Big Mac

in the news. Uh there were some also

Bitfinex stuff in the news. Uh I think

the US government frozen froze at least

the Poland government froze like six to

$800 million of their assets when their

market cap was

>> only like four billion. That's like a

large chunk. And then they got sued

later on by the US government saying

that they don't have enough reserves.

>> Yeah.

>> So we saw those news and we're like okay

well the US government is looking at

this industry and we better register and

you know again I asked my friends my

many of them have legal backgrounds and

then they sort of general consensus was

okay we got to we we should operate in a

registered faction in the US. So this is

2019. Um so we registered Binance US and

um it's a separate entities. It's a

separate deployment. Uh it's a separate

matching engine, separate liquidity. So

and Binance US has been regulated from

day one. Yeah.

>> 2019, 2020, 2021 things are just

generally working.

>> Generally. Generally. Yeah. Yeah.

>> Then you start to see some of these

other folks start to pick up steam. SPF

and FTX start to really Tell me about

that.

Um uh

>> how did you meet him? Because you ended

up owning a lot of the equity.

>> Yeah. Yeah. So well we we we invested in

them only 20% as equity at some point

and then we exited a year a year later.

Yeah. Um we didn't we didn't stay there

for very long.

>> Uh I think I'm first met him in January

2019 in one of the Singapore conferences

Binance organized.

>> I think at the time FDX did not exist.

uh uh Sam uh Bankerman Freed SBF was

running um Alamea and they hosted an

afterparty in the S uh Singapore uh

aquarium uh on Sentosa and they had

divers in the fish tank you know holding

a sign with etc. So they were they were

like a VIP client they were like a large

trader on Binance so we're friendly to

them.

>> Yeah. Right.

>> Yeah. So that was in January 2019 and

then a couple months later they came to

us saying look they want to start a

futures platform. They proposed a

futures platform uh some kind of a JV uh

that I I can't remember exactly but I

think they proposed 6040 in our favor.

Uh we we want I thought about countering

propos like we have we had all the users

they don't have anything back then. I

thought about counterproposing like 955

but I don't think that was very polite.

They're still like a trader. They still

like a VIP client.

>> So we declined that. We said no. Um

>> because they were a crucial part of the

liquidity pool.

>> Uh not a crucial part. They're a large

trader but you know Binance they they

were new too. They they it wasn't like

they were there for like many years.

>> Okay.

>> They were only there for like know

probably six months or a year. I don't

know the exact uh dates.

>> Um and then uh uh mid like a little bit

later they came back with a better

offer. Said look we uh uh like in summer

they came back with a better offer. We

still said no. Um and then in in

November they came back said okay look

we're going to offer you this really

really attractive offer. But then FTX

was launched. Have some volume. and they

said look we're going to give we're

going to basically give you 20% at this

at this price and there was a swap of

tokens B&B versus u FT tokens so that's

we got some initial uh FT tokens at the

time B&B tokens are much more liquid and

FT tokens are less liquid so um we done

that deal and then um almost as soon as

we did that deal I keep hearing from my

friends like you know SBF badmouthing us

in the Washington circles in the US etc.

I was like, "Come on." And then um they

also did some other stuff which which is

kind of annoying. Uh they they pay five

times salary uh of to our VIP uh uh

account managers uh that had access to

our VIP database and then so that girl

goes goes working for we if we match

that girl then we have to 5x everybody.

So like okay you you go work for them

and then

>> the day after the girl go works for them

our VIP clients gets called saying look

they going to get a better rate on FTX

etc. Like so I called Sam said like can

you stop doing this? We're like we're

your shareholder at the same time he's

like look see like can we do a onetoone

panel on a crypto event right so fine

and we're an investor we want we want to

help promote it. I actually want

multiple exchanges to be to be

successful in the industry because then

we wouldn't be the ones that get

targeted all the time.

>> Yeah.

>> But there was always like no I always

keep hearing there was some bad mouthing

some other this and that. So a year

later, I think it was mid early 2021, we

said uh and they were they were claiming

to be like raising money at you know 32

billion valuations. We're like, well,

why don't we exit actually? So, in our

investment clause, we had veto rights on

any future rounds, right? So, if you

want to block them, we could. I didn't

want to use that to block them. Uh

>> oh, wow.

>> So, I was like, you know, even if why

don't we just exit and we can compete,

>> right? So um and then we thought we we

talked about exit and then we exited I

think in if I remember correctly it was

in July the deal was finalized and the

transfer was done in July 2021 and this

is like a full a full year and a half

before they had issues at the time we

didn't know

>> right because there was some rumors that

a lot of their issues started after you

sold and they were somehow conjoined.

I'm sure you've heard of that but you

can put all of that to bed.

>> Yeah. So that's categorically not true.

And also because of the competitive

nature in the businesses, even though

we're a shareholder, I never really I

never ask them for for financial

statements.

>> Oh wow.

>> So I just, you know, I just didn't ask

for it. I'm a very passive investor. So

when I invest, I don't get involved in

their business.

>> Yeah.

>> Um and they also they're slightly

competitive. We have we had a futures

platform. They had they have a futures

platform. So I try to stay no let them

do their thing.

>> So post this the thing with the FTX

thing that most people talk about are a

couple things. One was the way in which

the restitution happened was suboptimal

to some of the holders of of FTX people

who had cash money there. The other

thing that people talk about is the

value of some of these investments post.

>> What do you think in the aftermath of

all of this? It says anything at all

about the industry or

>> um I don't crypto in general or Yeah. I

don't understand the whole uh bankruptcy

process whether that's fair or not. Um I

read a lot of different things online.

Also um just to be transparent, there's

an ongoing lawsuit between the state and

us. they want to try to claw back some

of the money that we got like a year and

a half before,

>> right?

>> So there's probably limited stuff I can

comment on that.

>> Um, yeah, but again, I'm not an expert

there, but I did hear some complaints

about, you know, some Chinese users not

allegible, etc., etc., but now from what

I read is the the because of their

appreciation of crypto now in US dollar

terms, uh, they have enough uh, right?

>> Even though if people held crypto back

then, they probably have gotten more. I

don't know what the deal is. When did

things at Binance

start to get complicated for you?

>> You mean with the US governments, right?

>> Yeah.

>> For me like uh they started asking for

information the information requests

which we always comply, right? So that

was like 2021 2022ish

and it was like uh late 2022 it was

getting more hostile. Um, and then I

think in early 2023 was more clear that

they were making uh they were uh we

either reach a deal of some kind or

they're going to indict us or stuff like

that. There was like it became

negotiations. How do you deal with that

as a person? Do you think I can't

believe this is happening? Like when

you're in this meeting and your lawyers

or whoever it is are telling you, hey

CZ, I think there's going to be an

indictment.

>> Yeah.

>> I don't How does that meeting go?

>> So, uh, number one, I'm not a legal

background, so I had to rely on a lot of

other people's advice. That's generally

the harder part for me because I don't

have experience there like no no one has

experience going through this. You go

through this once you never want to

touch it again. Right. So um so no one

really on on the receiving end have any

experience. Um you have a bunch of

lawyers and the lawyers are the lawyers

I think are good but how you organize

lawyers actually is quite tricky. If we

hire a bunch of expensive lawyers, they

all have different specialties and they

all have different opinions

>> and they all want to seem like the

smartest person that's driving the

decision

>> and also they they all want to take a

lot of time to analyze. They get paid by

more time they spend. Um I'm not saying

that they're unethical. They they want

to do a really good job.

>> Um but then they go in all kind of

different tangents. Um so you get

dragged in a lot of different different

places. That was the most troublesome

part for me. If somebody told me like

this are the three things you got to

focus on this is you know you got to

this strategy. We also didn't have a

strong legal team. Uh our team is young.

Uh we we our our legal team didn't have

this type of experience dealing dealing

with this type of uh uh uh issues. So

that was always tricky. But I kind of

look at when I come by the way where was

the entire team at this point still

>> this we're all spread out

>> now. You're everywhere.

>> We're now we're everywhere. We're spread

out. And I think I 2023 I was in Dubai.

Uh I was in Abu Dhabi Dubai split in

time. So um yeah it it was very

stressful um but the way I deal with

stress is I just look at the best and

worst case scenarios right so um say

asked team what's the best case scenario

okay you pay a fine you get a you know

you get a DPA or then this this thing's

over then okay so that's the best case

and then the worst case okay so they

were going to ask you to they're going

to try to put you in jail um stuff like

that

>> was that the worst case though because

at the time it seemed like the fact

pattern was folks would get some sort of

probation or

>> that would be the worst worst case but

also uh yeah so performing nobody got

put in jail but they they could ask for

it.

>> Yeah. Right. Right. Right. There's

actually another worst case which is you

fight it and then you if you if you come

if you can't agree on a term you fight

it and you stay in the UAE which is a

non-extradition country and you know and

now you have citizenship and so they

there's almost zero chance you'll get

extradited but then your travel is going

to be limited anytime if if you cross to

a different country even if that country

is a non-extragene country that can

still be a chance that there's a deal

being made right it's kind of leaving

fear so

>> plus it also creates complexity just at

governmentto government level if folks

are allies and it just it just creates a

lot of noise

>> it creates a lot of noise it also

creates a lot of pressure for the UAE

government potentially I don't want to

trouble people who gave me a citizenship

>> I don't want to be the trouble causer

>> right

>> right so um and uh so but you know there

are the the worst case scenario is like

you know you don't go there they indict

you and then you they put you on the red

notice list

>> um stuff like that right so that those

you know those those are potential

possibilities yeah so how did you

resolve It took like the negotiations

like was basically daily calls with with

like 12 20 lawyers on call for like more

than a year.

>> Uh more than a year more than a year

>> of back and forth with the president

Biden DOJ

>> the president Biden DOJ and and the most

common thing I hear from my lawyers is

we have never seen them this hostile on

a case like this.

>> Right. We have never seen this before.

This is this like that's the most common

phrase my I've heard. At some point you

just become desensitized to it or do you

keep internalizing it, personalizing it?

You think why is this happening to me?

No resentment or just more how did you

deal with it? I'm just

>> It takes it takes successive steps and

there were a couple steps which are

really hard to take. Um the step where

you say look in the negotiations right

they come to a few points where you say

look we just we're just going to have to

say no. Um and it's like look we just

can't agree to that deal. They wouldn't

back off and I couldn't agree to that

deal. We just have to say no. And then

there was a couple weeks that lapse and

you don't know what's going to happen.

So you

>> purgatory. So you could get indicted in

they can indict you any moment, right?

So that's their choice. You you you

already said no to that to that. There

were like a couple periods of like that

and then oh my god in those in those

couple weeks you're like you're mentally

thinking okay

>> I can't travel anywhere. Um so I I might

have to get used to this life of just

living in one country and be very

careful etc. there might be some sealed

indictment that that's not public the at

any border that you cross and u

interestingly they come back after two

weeks and they say okay we can negotiate

again and then you're like what do you

think is happening over there

>> well no I think that's a now looking

back that's a very that's a very useful

negotiation tactic for me or for anybody

in my situation for

>> the silence

>> uh yeah the silence for anybody who's

going through this on the receiving end

you only go through this once you're not

experienced this is your life I mean

there could be a red sealed red notice

against you um and this is the life they

have to deal with going forever and they

don't like this thing these things can

stay there for like decades for them

they do this every day this is like this

is their daily job right so and but they

I think they're smart enough that they

know two weeks is about the optimum time

because longer than that you really get

used to it and when they come back to

negotiate you're going to say no right

it's like look I'm already used to this

>> right so like if you leave the guy in

the situation for too long

>> interesting interesting

>> so so they're very skilled in this type

of uh mental uh uh uh work,

>> right? Whereas Yeah. So, there were some

really tough periods and for this type

of stuff, you don't get used to it. Um

you it's it's mentally challenging. How

did you get yourself to a place to agree

to the final terms?

>> After a lot of negotiations, we're like,

okay, um basically said, okay, I

validated a single uh single charge of a

banking secrecy violation, which is a

registration failure, which is a federal

crime. It's it's serious. Uh but no one

went to jail for this in history. Um and

um there's no there's no uh

>> sorry that charge that's more technical.

How does that relate to the perception

of what was in the media at least in

America which is money laundering and

aiding at abetting folks and not doing

KYC and not doing AML versus the actual

charge. Are those two things connected

and they're equal or these are sort of

disjoint

>> perception versus the actual specifics?

>> Sure. I can try to explain my

understanding. I'm not a lawyer. So I

want to make a small disclaimer here. Um

this is my layman understanding could be

wrong.

>> Uh there's a first my understanding

there's a first level is like banking

secrecy act violation which is a failure

to register. Basically you serviced we

service US users without register as a

financial services company in the US.

>> So that's a you thing that has nothing

to do with the user themselves doing

anything nefarious or bad.

>> No, you did not register with the proper

authorities to say I'm going to take on

US customs.

>> And so that's number one, right? So that

that that's the bait that's the kind of

bait layer. Okay. On top of that you can

say look you didn't have adequate KYC

AML procedures. So your all your

procedures are not strong enough. Um so

uh uh so that's another that's another

level which even even if you're not

registered you're also supposed to have

good KYC etc. AML procedures. Um and

those things are not and those things

people think that's a black and white

thing. In reality it's not. Uh it's how

well you do it. Uh which systems do you

use? what how do you do this?

>> How many people do you have? What's your

standard operating procedures? Yeah.

>> Yeah. So there's actually a lot of

details and then like uh quite a bit

above that in my understanding is if you

have somehow known and facilitated uh

bad transactions. So you can have a weak

AL pro AML program and that didn't catch

all the bad players but you you don't

know that.

>> Right. So it's not like you're

intentionally facilitating that.

>> It's not robust.

>> It's not robust.

>> It's relatively naive but it's there.

>> Yeah. versus this is I know this to be

bad and I'm enabling it to happen

regardless.

>> Yeah. Right.

>> And there's the next level which you

personally handling the transactions.

>> Right.

>> Right. So which is you know uh you know

Charlie Charlie Shramm handled uh

transactions for Silk Road for for Ross.

Right. So that's how you know so there's

different levels. I don't handle any

transactions at all my myself. That's

just not my thing. I just don't do it.

And so they said okay Binance number one

we didn't register KYC ML is weak. Uh so

that those are things we can fine we can

agree on that

>> layer one layer two.

>> Yeah. So we can agree on that for those

single charges without any other

additional stuff. No one ever went to

jail in US history even till today.

Right. So u uh and then the government

uh we couldn't agree on the two addition

the government want to add two

additional charges they call

enhancements the three and four. The

three and four they said somehow I

personally facilitated but they couldn't

provide any evidence. They were trying

to lean on the company somehow something

happened in the company you know etc.

they were trying to use. Were they able

to point to a transaction or some

>> No, they wasn't. So this two

enhancements the court outright rejected

but we decided to we before I went to

the US we said we agreed that we will

argue that in court right um and also

based on I don't want to get into the

sort of privileged conversations but

like the understanding I went before I

went was no one went to jail the worst

uh guy who got punished was author Hayes

of Bitmax he got six months of home

confinement uh for run for for Bitmax

and uh when I look at that case he had

much more direct interactions with

clients

whereas I had much less direction. I

basically I don't deal with clients at

Binance. I deal with users on Twitter

but not like you know the Bance back end

kind of thing.

>> So I felt pretty confident that you know

we should be in a fairly strong position

and that's the best thing forward.

>> Right. So you're like we agree with

this. We agree with this. We're going to

really debate this in court. Layers

three and four. I'm going to come to the

US.

>> Yeah.

>> And we're going to hash it out in court.

>> Yeah.

>> So you land in America.

>> Yeah.

>> You go into the courtroom. you start

this process, what happens?

>> So yeah, there was quite a lot of

details there. Uh

first of all, the first like the first

day you go you go and plea, right? So

the plea the agreement has already like

debated

>> by the way. Sorry. And where you're

staying in a hotel?

>> I was staying in a hotel. Yeah, I was

staying in a hotel in downtown Seattle.

Um

>> is your family with you or No,

>> my family went to join to to Well, not

my not my not my not my kids. Um but my

sister and my mom went to join me. Um I

didn't want my kids to go um they have

school and and then my partner has a

business to run. Um I was already like

no no longer running the business.

>> Yeah.

>> So I didn't want to drag her away from

from from from that.

>> So um

>> yeah so my sister my my my my mom and my

older kids with with me

>> and then um uh yeah so that's and then I

was stay in a hotel um and then the next

morning go going to court. Going to

court the first part of the process is

the plea right. The judge asks you, "Do

you understand this paragraph, this

paragraph, this paragraph?" Just say,

"Yes, yes, yes." the the paragraphs were

already like negotiated like out of the

wazoo by the multiple so many lawyers

>> over lawyered

>> over lawyered and you the um so so you

know and then you then the lawyers

debate about you know the the uh they

didn't the first case when I after the

plea they didn't debate about the charge

they debate about my bail my bail

condition right so I got a post bail u

my lawyers argued I should be allowed to

go back to UAE waiting for the sentence

three months Later the government argued

that um uh I may not come back. So they

want me to stay in the US and they said

they will not restrict me in my movement

in the US because I don't I don't I