But Zhao’s journey at Binance has been far from smooth: the company has been embroiled in several controversies.
REUTERS/Darrin Zammit Lupi
In October, according to the New York Times, some $570 million worth of cryptocurrency traded on Binance was stolen in a blockchain hack. Zhao told CNBC in an interview in October that no users lost money in the attack and that “software code is never free of bugs.” The Binance hack is one of the biggest cryptocurrency hacks of all time.
Binance said in a blog post that in the event of a future hack, its validators will decide whether hacked funds will be frozen. The decision would be made through a series of “on-chain governance votes” – the system that manages and implements changes to the blockchain. Binance added that they would also consider implementing a “bug bounty reward system,” so that users are incentivized to report bugs.
“Nearly $570 million was minted and seized by the hacker, $100 million was not recovered and was removed from the chain by the hacker. No users or user funds were taken been affected,” Mustajab said.
Binance has also been criticized for its ties to China. Binance only delisted Chinese yuan-based trading pairs from the exchange in 2021 and has served customers in China for several years, according to a September article from Protos. Chinese authorities banned all transactions related to cryptocurrencies in September 2021.
Zhao responded to these allegations in a blog post published in September, in which he clarified that Binance was never incorporated in China and said it did not “operate like a Chinese company culturally.” He added that he is “a Canadian citizen, period.”
Binance also attracted controversy for allowing Iran-based users to trade cryptocurrencies on the exchange despite sanctions imposed by the United States, according to a July report from Reuters. Binance asked Iranian traders to liquidate their accounts in November 2018, but seven traders continued until September 2021 to use their accounts even after the ban. Binance did not respond to Reuters’ requests for comment at the time.
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