- Former employees and investors have disclosed to Bloomberg that CEO Changpeng Zhao has a tight grip on Binance.
- One said to the outlet, “at the end of the day, he’s the holding company.”
- That is at odds with the fundamental principles of the DeFi revolution.
The CEO of cryptocurrency exchange Binance has been praised in the past for his libertarian views on crypto and his decentralized management style. But according to a new report from Bloomberg, Zhao may have more control over the company than he lets on.
In an interview with Bloomberg Businessweek, CEO Changpeng Zhao talked about the company’s purpose, his move to Dubai, and his backing for blockchain-based projects that operate independently without a central leader.
According to former employers and investors who spoke with Bloomberg, this isn’t how Binance really works. According to the reports, Zhao has control of everything that happens at Binance, in contradiction with the decentralized finance movement’s aim to take power away from the traditional financial system.
Former employees and investors say that while Binance is structured as a decentralized company, with decision-making power distributed among several different entities, Zhao, in practice, has a tight grip on the company. One former employee told Bloomberg that “at the end of the day, he’s the holding company.”
Many blockchain and cryptocurrency firms have formed themselves as so-called Decentralized Autonomous Organizations, or DAOs, which are comparable to cooperatives without a rigid hierarchy. Many firms choose not to establish huge centralized headquarters, as Binance has in the past.
This is at odds with the fundamental principles of the crypto-currency revolution, which was supposed to decentralize power away from central authorities like governments and banks. If Binance is indeed controlled by one man, it would be a major setback for the crypto community.
Zhao, in turn, refers to Binance as an “organization” rather than a company and its workers as “team members,” with the term Binancians used to refer to all other Binance ecosystem participants.
Binance is also notorious for not clarifying where the company is based. Zhao’s most recent physical appearances were in a Reddit AMA in late May, when he said that Binance has offices in Bahrain, Dubai, and Abu Dhabi that are “not small.” Binance.com’s primary exchange receives the majority of crypto purchases and sales, but its physical presence is also unknown.
This ambiguity allows Binance to avoid strict regulations, which has been essential to the company’s growth. However, According to Zhao, Binance has determined to establish a base of operations with regulators. “The location will be announced very soon,” he told Fortune in September 2021, yet the firm has yet to do so.
According to the documents, Zhao owns several Binance operations in countries around the world, including Singapore and Italy.