The Exchange That Hit No. 1 by Never Asking Questions

The World’s Richest Crypto Mogul Drives a White Nissan

Reader, this past June, a white Nissan SUV pulled up outside a resort in Abu Dhabi. Behind the wheel was Changpeng Zhao (CZ), founder of Binance, the world’s largest crypto exchange. The New York Times (NYT) estimates his net worth at roughly $114 billion. As he picked up the reporter covering him, he called this car his “Lamborghini.” With a phone mounted on the windshield, he looked to the journalist less like a billionaire and more like the world’s wealthiest Uber driver.

[Driving around Abu Dhabi in his Nissan S.U.V.Credit…Laura Boushnak for The New York Times]

He likes to present himself as an ordinary guy. His record says otherwise. U.S. prosecutors concluded that Binance had served as a conduit for Russian money launderers, parties evading Iran sanctions, and terrorist financing. CZ pleaded guilty in 2023 and served four months in prison. On October 23, 2025, President Trump granted him a pardon. He remains Binance’s largest shareholder to this day.

An NYT reporter met with him repeatedly this year and recently published a long-form feature on him. This issue follows that story to examine how one company treats rules: what Binance never bothered to ask its customers, where it relocated whenever regulation got inconvenient, and why AI investment capital kept flowing into a company like this anyway.

What Binance Really Sold Was No Questions Asked

Changpeng Zhao first got a pitch for bitcoin at a poker table in Shanghai in 2013. After months of studying it, he sold the Shanghai apartment his family lived in and put all $900,000 into bitcoin. He founded Binance in July 2017, and within months it was the world’s largest exchange. The New York Times wrote that Binance has never given up that spot since.

The Times pointed to two drivers of that growth. One was investors who wanted more risk than just owning crypto. Many weren’t satisfied simply swapping dollars for coins of equal value, so Binance opened up margin trading¹ — borrowing money to make bigger bets.

The other factor mattered more. Many investors didn’t want to reveal who they were, and Binance didn’t ask. For the first four years after it launched, the exchange opened accounts without even requiring the Know Your Customer (KYC)² information that any ordinary financial firm collects as a matter of course. It was a marketplace where unverified products changed hands between unverified people, and fees piled up with every trade. According to Zhao’s own memoir, the company’s profits hit $1 billion before long.

Binance wasn’t the only exchange like this. The founder of one crypto consulting firm told the Times that the exchange market back then was full of places like Myspace, and Zhao was the one who built the Facebook. In other words, he out-executed rivals who were taking the same risks. And the biggest friction Binance cut away was friction the law had deliberately built in to stop financial crime.

From “Ask Forgiveness, Not Permission” to “I’m Just an Engineer”

In the New York Times interview, Changpeng Zhao said he never intended to break the law in the early days. He explained that he lacked experience in the field, that he was an engineer, and that he lived in China. In Abu Dhabi, he described himself as someone who follows the rules.

Records filed by U.S. prosecutors in court tell a different story. Prosecutors quoted him telling staff, “It’s easier to ask forgiveness than permission.” According to court documents, he discussed internally how to obscure the fact that the platform was serving U.S. users without a U.S. operating license, and told one subordinate to put nothing in writing. Messages among employees even included jokes about laundering drug money being tough these days, so come to Binance.

The outcome was a 2023 settlement with the U.S. Department of Justice. Changpeng Zhao pleaded guilty to violating the Bank Secrecy Act³, an anti-money-laundering law, and stepped down as CEO. The company paid $4.3 billion. At his sentencing hearing in the spring of 2024, he said he deeply regretted his failures, and the judge handed down a 4-month sentence. His tone in the New York Times interview was different. He said he went to prison for running a platform without proper KYC, and asked why, if the U.S. lets people vote in presidential elections without an ID, the people who designed such a system weren’t the ones going to prison. This characterization of how U.S. elections verify identity is his own claim.

A similar narrative surfaces around the FTX collapse of November 2022. When reports emerged questioning the financial health of rival exchange FTX, he tweeted that he would sell $500 million worth of FTT, the token tied to FTX. Investors rushed to pull their money, and two days later he announced a deal to acquire FTX—only to withdraw it a day later. By then, FTX had already diverted $8 billion in customer funds, and its founder, Sam Bankman-Fried, was sentenced to 25 years in prison for fraud. Changpeng Zhao says he only intended to sell gradually over several months and had no intention of bringing the exchange down. Bankman-Fried has said he was played. The Times reporter wrote that his way of framing himself as someone swept up in events by accident isn’t always convincing.

Finding the Country Where the Rules Bend

Academics have a name for the strategy of hopping between countries in search of a more flexible legal framework: jurisdictional arbitrage⁴. The New York Times framed this as Changpeng Zhao’s real talent.

Here’s how the path unfolded. In 2017, he and his colleagues left China in the middle of the night, just before the Chinese government announced its exchange ban. Japan didn’t work out, and Singapore made it hard to secure a work visa. Then, on a Saturday morning in October 2021, he landed in Dubai — and within hours, a government minister showed up with an offer: a Golden Visa guaranteeing 10 years of residency. A review process that normally takes weeks was done in under 12 hours.

By the end of that year, Binance had signed a memorandum of understanding with Dubai authorities to help draft crypto regulations, sending three employees to help build the framework. A draft emerged in January 2022, and within weeks it became law. In other words, the company that was supposed to be regulated had a direct hand in writing the regulations.

Citizenship came next. In late 2022 or early 2023, a member of the Emirati royal family asked him over dinner whether he’d want citizenship. A few months later, a box containing passports for his whole family arrived at his door. The UAE has no extradition treaty with the United States. Changpeng Zhao has said that the UAE’s refusal to hand over its own citizens was a major source of leverage. He admitted he seriously considered living as a fugitive while negotiating with the U.S. Department of Justice. The Times saw this passport as giving him substantial leverage in those negotiations. In the end, he went to the U.S. and served his sentence — and just 26 minutes after his release from custody, he was on a private jet to Abu Dhabi.

He doesn’t hide why he loves this country, either. Walking past the presidential palace, he remarked that democracy is inefficient, and that having a benevolent dictator makes things far more efficient because you spend less time debating. At one private event, he said the UAE’s president approached him in the audience, leaned down, and asked whether there was anything making him uncomfortable. In the same article, the Times also noted that the UAE conducts mass surveillance, bans even mild dissent, and frequently exploits foreign laborers. Not everyone gets treated the way he does.

What $2 Billion Actually Bought in the Binance Deal

In early 2025, MGX — the AI investment firm chaired by Sheikh Tahnoun, the man steering UAE sovereign wealth — agreed to put $2 billion into Binance. According to people familiar with the matter, the valuation set at the time was $75 billion. MGX reportedly saw Binance as the future remittance network where AI agents, not humans, would be the ones paying.

The payment method turned out to be the sticking point. Changpeng Zhao wanted to be paid in bitcoin; MGX wanted a stablecoin⁵ — a token engineered to hold a steady $1 value — rather than bitcoin’s volatility. They settled on USD1, issued by World Liberty Financial, the venture founded by President Trump and his sons. At the time, the coin had no operating track record whatsoever.

Accounts differ on who actually picked it. MGX says it reviewed several stablecoins and chose USD1 for its business fit. The Wall Street Journal reported last year that Binance had asked to be paid in USD1. Changpeng Zhao says the decision was MGX’s, and that any trustworthy coin would have worked for him.

Lined up chronologically, events that spring look like this: in January 2025, an Emirati-backed investment firm bought a 49% stake in World Liberty, and Sheikh Tahnoun joined World Liberty’s board. The UAE was simultaneously negotiating with the White House over AI chip exports, while Binance was eager to shed the restrictions imposed by its 2023 settlement. The deal was announced in May 2025, and 2 weeks later the White House agreed to grant the UAE chip access.

Stablecoin issuers make money by taking in cash for the tokens they put out, then investing that cash. The $2 billion inflow instantly made World Liberty one of the largest stablecoin issuers in the world. According to the New York Times, World Liberty generated $799 million for President Trump in 2025 — larger than his earnings from real estate or social media, and his single biggest source of income.

The pardon process sits inside this same timeline. Changpeng Zhao says he only began taking the idea seriously in March 2025, after other crypto executives were pardoned and the press reported he might be pursuing one too. Documents and sources reviewed by the New York Times tell a different story: his legal team had been exploring the possibility with pardon specialists since December 2024, and Binance paid $2.1 million to a lobbying firm close to President Trump’s elder sons for services that included pursuing administrative relief such as a pardon. World Liberty says it had no involvement whatsoever in the pardon decision. The White House has said special envoy Steve Witkoff played no role in the pardon process.

Changpeng Zhao says he sees nothing wrong with any of it. Why, he asks, should it be a problem for the ruling families of two countries to do business together? He compared it to the old practice of marrying a princess from one country to a prince from another to secure 50 years of peace. The New York Times notes that if Democrats take Congress in November’s midterms, this deal will very likely become a target of congressional investigation.

The Books Aren’t Closed Yet

Recent events show that the same questions persist even after the pardon. According to the NYT, Binance fired or suspended four compliance staff last year. They were the ones who reported that roughly $2 billion had flowed from customer accounts to entities tied to Iran. The company disputed the analysis and said no one was disciplined for raising concerns. The U.S. Department of Justice later found that two Chinese firms had used Binance to launder proceeds from Iranian oil sales, but it did not indict the exchange itself.

Cracks are showing in the UAE relationship too. Binance won its Abu Dhabi operating license in December 2025, but this past summer, two Binance employees were briefly detained by local police, who were looking into possible financial crimes on the platform. Changpeng Zhao said he reached out to a contact at the police and to associates of Sheikh Tahnoun.

Governance, too, is woven through with personal ties. Under the terms of his guilty plea, Zhao is barred from managing Binance. One of the two co-CEOs who now stand in his place is He Yi, the mother of his three children. And the independent board he set up two years ago is chaired by Gabriel Abed — the friend who first suggested Dubai to him. The two still ride jet skis together.

Oswarld’s Lens

The part of this piece that stuck with me longest was the reason MGX gave for investing. They framed Binance as a bridge to an era when AI agents, not humans, do the paying. In Issue 184, “Cloudflare, Which Gave Bots a Name and a Wallet,” I covered how the core product in agent payments isn’t the wallet — it’s the identity system behind it. The first question any agent payment has to answer is: who sent this agent?

Binance’s rise to the top was a process of skipping that very question. A company that didn’t ask its own human customers for four years received $2 billion as a candidate for the payment network that agents — which will trade far more, and far faster, than humans ever could — will one day run on. There’s no evidence that Binance’s know-your-customer practices today are the same as they were in the early days. But going by the accounts of compliance staff let go last year, there isn’t enough evidence yet to say the habit of not asking has disappeared entirely either.

Cutting friction is one of the most powerful levers in any growth strategy. The question Binance’s case leaves behind is: who was that friction protecting? Removing one step from sign-up and removing the step that verifies who a customer actually is both lift conversion rates — but they are not the same decision. And very few companies get to choose a country willing to absorb the consequences of the latter.

Closing

In his memoir, Changpeng Zhao spends a page and a half laying out his belief that we might be living inside a simulation someone else built. The motto he holds onto is that it’s just a game.

At Lompoc prison, he tried to explain to his fellow inmates that the Binance case had no fraud and no victims. The answer he got back was that everyone says that. The same story sounds like a stock excuse behind bars — and becomes dinner conversation at a royal banquet in Abu Dhabi.

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💬 If a financial app you just signed up for skipped identity verification, would your first reaction be relief or unease?

📨 If you know a colleague wrestling with the tension between regulation and growth, pass this one along.

References & Further Reading

• The New York Times, 「Inside a Billionaire’s Paradise With Crypto’s Most Powerful Ex-Convict」
• AP·PBS NewsHour, Trump pardons Binance founder Changpeng Zhao (2025-10-23)

The author is Oswarld (Kwangseob Ahn). Current roles: Adjunct Professor at Sejong University, Strategy Consultant at INLEVEL9. Career, research, books, and recent work are kept current on the About page. Latest · July 2026: HEMA-2: A Consolidation-Aware Tri-Memory Architecture with Multi-Channel Scheduling for Lifelong Conversational AI.

📝 Glossary

Footnotes

1. Margin trading: a method of trading where you put up only part of the funds as collateral and borrow the rest from the exchange to trade at a larger scale. Both gains and losses are amplified. ↩

2. Know Your Customer (KYC): the process by which a financial firm verifies a customer’s identity and the purpose of their transactions before opening an account. It’s a basic safeguard against money laundering and sanctions evasion. ↩

3. Bank Secrecy Act: a US law requiring financial institutions to maintain anti-money-laundering systems and report suspicious transactions to authorities. ↩

4. Jurisdictional arbitrage: a strategy of relocating a business or one’s residence to take advantage of differences in laws and regulations across countries, choosing whichever legal system is most favorable. ↩

5. Stablecoin: a cryptocurrency designed to be pegged to a fiat currency like the dollar. Issuers invest the funds they receive — often in government bonds — to generate returns. ↩