Crypto investors might be reeling from the most chaotic blowout in the industry’s history, with the market’s value down about two-thirds in just six months, and the price of Bitcoin, the most traded crypto asset, dropping 20% this week alone.
But for one of the biggest crypto players, the chaos is a golden moment: the chance to go on a buying spree, with the potential to snap up talent and companies at depressed prices.
Disaster and also opportunity
“I’m not debating that it is disastrous. It is bad,” Changpeng Zhao, cofounder and CEO of Binance, the world’s biggest crypto exchange by far, told Fortune in Paris on Thursday, adding that he’s not sure, and historically it has been in four years cycles, but history doesn’t predict the future. “But when this disaster is happening, there is also opportunity.”
When Zhao—or CZ as he is universally known—met Fortune in London in early March, for a cover story in the magazine, Binance was estimated to be worth about $300 million, according to insiders; the company does not disclose its figures. That made the privately owned firm one of the world’s most valuable entities, and its CEO, which owns the biggest stake, worth as much as $73 billion—an estimate CZ told Fortune at the time was “fictitious pricing.”
In the months since, the company’s value, and CZ’s, has presumably plummeted, along with the rest of the industry. And yet Binance, which collects a fee on each trade, has accumulated enough cash on hand to take advantage of the downturn.
“We do not need to raise money,” CZ said, in an interview at Viva Technology, a four-day industry expo in the French capital. “Based on my knowledge, we have a much larger budget than anybody else in the industry.”
That could put Binance among the few for whom the upheaval is good news. “Although it is painful for a lot of people, it weeds out the weak projects, and only the strong ones stay,” he says. “Everyone who lasts, who survives, will be stronger.”
Hiring spree
Binance is sure to be among the survivors, in CZ’s view.
In stark contrast to its U.S. competitor, crypto trading platform Coinbase, which announced on Tuesday that it was laying off 1,100 staff, Binance is using the industry shakeout to hugely boost its staff numbers, with about 2,000 new hires to add to the existing 6,000 or so employees. “We want to close them by the end of the year,” CZ says. With industry layoffs, he says, “offers are much more reasonable.”
And he says he intends making big acquisitions, “this year for sure,” including perhaps in the gaming industry, which he told Fortune back in March was ripe for disruption by crypto. In February, Binance announced it was investing $200 million in business media company (and Fortune competitor) Forbes. The deal has yet to close, but CZ says the company is still committed to it.
And an even bigger deal is pending: Twitter.
Binance has committed to investing $500 million toward Elon Musk’s planned purchase of the platform—something CZ says he and Musk briefly discussed through texts on the encrypted messaging app Signal.
While that deal is still in question, CZ says he believes Twitter could potentially be a hugely lucrative investment for Binance. “It is probably the most important free speech platform we have today,” he says. “I use Twitter way more than I use Binance.”
He also envisions having Twitter earn revenues through cryptocurrencies—a model that would then likely extend to other social media. Away from the grim news around crypto, CZ says he still believes the industry will dramatically change several sectors.
“Twenty years ago, what did the internet look like?” he says. “Twenty years from now, you’ll be sending money to England, Latin America, China. You won’t think about crypto, you’ll just say you paid $1 for an article written in Latin America. You’ll be in the metaverse, interacting with people, and you won’t think about the technology,” he says. “It will be everywhere.”
June 17, 2022: This article and headline have been updated to reflect Changpeng Zhao’s thoughts on the patterns of crypto downturns.
