(April 8): Changpeng Zhao, who built Binance into the world’s largest cryptocurrency exchange before pleading guilty to anti-money laundering and US sanctions violations, gives his version of the company’s legal crisis in a memoir published on Tuesday.
“Freedom of Money” describes how Zhao, known in crypto circles as CZ, navigated a federal investigation that ended with a more than US$4 billion penalty, and covers his resignation as chief executive and four-month prison sentence.
The book, which includes testimonials from global finance heavyweights Larry Fink and Ray Dalio, recounts what Zhao describes as multiple friendly interactions with Gary Gensler before Gensler became the Securities and Exchange Commission (SEC) chair and sued Binance in a suit that was later dismissed under the Trump administration.
It also details an early investment relationship with Sam Bankman-Fried, the disgraced founder of failed crypto exchange FTX, that went awry when FTX began poaching Binance’s employees and trying to lure its biggest clients.
The memoir is heavy on personal narrative and not as detailed on some of the episodes that were most consequential for markets, such as the FTX collapse and Binance’s aborted acquisition. But it does shed light on how crypto’s largest venue, which still handles roughly a third of global spot cryptocurrency trading, navigated its most serious legal and competitive threats.
Some details from the memoir:
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- Zhao writes that the Department of Justice’s opening settlement demand was US$6.8 billion. Binance eventually agreed to more than US$4 billion in 2023, and Zhao resigned as CEO after facing charges
- Zhao says he met Gensler in Tokyo for sushi in early 2019, before Gensler led the SEC, and that he was “pro-crypto back then”. Zhao offered him a role as a Binance adviser, which Gensler refused. According to the memoir, they snapped some photos together. Gensler later asked Zhao to record a video interview for a class he taught at Massachusetts Institute of Technology. Zhao in turn sent Gensler a congratulatory note when it emerged he was becoming chairman of the SEC. Gensler didn’t immediately respond to a Bloomberg email seeking comment
- Bankman-Fried secured an investment from Binance, then allegedly poached a VIP client manager. Some VIP clients soon received unsolicited offers from FTX
- One month after launch, Binance nearly lost its hot wallet when an early employee’s husband destroyed her laptop in frustration over late-night work hours. The funds were recovered
- Back in 2017, Zhao paid a bonus to staff in BNB tokens. A few years later, he realised he was given the bonus, too, and now had coins worth US$24 million sitting in an unused account
- Zhao served four months in prison, and later spent time at an ICE detention centre due to an overstayed visa. He began writing the memoir on prison computers available in 15-minute increments. In prison, Zhao recalls sharing a cell with a double murderer who snored at night. Prison food was so bad he lost more than 13 pounds
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