Who is going to save crypto? Cryptocurrency markets are in free fall, having lost some $2 trillion in a few months. Bitcoin, which in November 2021 was at its zenith of $67,000, is now hovering around $20,000.
The crash is compounded by the collapse of a number of prominent projects whose demise can be chalked up to shaky design and dubious financial soundness, rather than global financial unrest.
May, for instance, was marred by the $42 billion collapse of an “algorithmic stablecoin” that guaranteed its price would stick around $1, despite having no cash reserves. Two weeks ago, crypto lender Celsius, which had been invested in the terra-luna project, stopped all customer withdrawals due to a liquidity crisis; Singapore-based crypto hedge fund Three Arrows Capital has also been in distress, which might affect scores of customers and investors. Tether, a stablecoin reputedly backed by cash and other assets, has been facing the crypto equivalent of a bank run as users scrambled to exchange tethers for dollars, knocking some $15 billion off its market capitalization in under two months.
But amid the chaos, some players are thriving. Take Binance, the world’s largest cryptocurrency exchange. Several crypto companies are laying off staff, and yet Binance is on a hiring spree. While small-time bitcoin investors are licking their wounds, Binance’s CEO, Changpeng Zhao—who goes by CZ—remains convinced of crypto’s enormous value, if not its enormous price.
When we meet in a central London hotel, CZ is wearing a charcoal suit and a black Binance-branded T-shirt, ready for a day of meetings with lawmakers, regulators, and financial educators. His company is legally barred from operating in the UK following a decision by the British Financial Conduct Authority last year—although CZ says that preparations to get a license to allow Binance to operate in the UK are underway and that licenses have already been secured in France and other European countries. Since its launch in 2017, Binance has often clashed with regulators in countries ranging from Germany to Japan to the US, with accusations including the facilitation of money laundering (also the subject of a recent Reuters report, which Binance rebutted in a point-by-point essay), inadequate compliance with securities laws, and the opacity of its company structure.
In this end-of-times climate, CZ is left considering whether his company might play the role of crypto’s lender of last resort—the central bank that could help beat back a wider threat to the whole sector. Fellow exchange FTX has already started doing this with the “bailout” of ailing company BlockFi. Binance only has to pick which company to rescue next, further strengthening its hand in this volatile industry.
While some might soon salute Binance as a savior, others have taken exception to the company’s role in boosting crypto over the past couple of years—hype that ultimately came crashing down, hurting legions as a result. A class action suit in the US blames Binance for the terra-luna debacle, alleging that by promoting the project and listing its currency on its exchange, Binance gave the asset a legitimacy that misled investors. Sipping an English breakfast tea in London, CZ remains unfazed, almost philosophical in his acceptance that failures are going to fail.