The Scoop
Billionaire Binance founder Changpeng Zhao has been bunkered down in Dubai as French prosecutors investigate the world’s largest crypto exchange for alleged money laundering, according to several colleagues who have been in touch with him.
Zhao, commonly known as CZ, had traditionally split his time between Dubai, Paris, and other global cities including in Southeast Asia, but he has avoided traveling to France since the investigation was reported by French media about two weeks ago. In the U.S., the Securities and Exchange Commission has sued Binance and CZ, accusing them of misleading investors and diverting customer funds.
The U.S. and the United Arab Emirates do not have an extradition treaty, but France and the UAE have had an agreement since 2007. Dubai has ramped up enforcement of extradition pacts following a downgrade from global watchdog Financial Action Task Force last year.
A Binance spokesperson disputed the characterization, saying CZ has a home in France that he uses frequently and that he is still traveling for business. The exchange also said “we abide by all laws in France, just as we do in every other market.”
The company does not claim a set location for its headquarters, with CZ claiming in the past that the firm is based wherever he is at any moment.
Know More
Binance invested a lot of money and political clout in the French capital to make Paris a burgeoning crypto hot spot — with a clear top dog. The exchange has created conferences, staffed up its local office, and even partnered with Burger King in the city to let customers use crypto to buy burgers and fries.
While Andreessen Horowitz chose London as Europe’s digital assets hub, Binance was betting big on Paris. France also approved Binance to do business in the country while the United Kingdom did not.
Bradley’s view
France turning from friend to foe hurts the billionaire more than the probe in the U.S., where he had been viewed as the Darth Vader to Sam Bankman-Fried’s Luke Skywalker, before the latter’s legal troubles (Bankman-Fried is no longer an investor in Semafor). France accepted CZ and Binance as the company that would turn Paris into a crypto hotspot. He personally spent a lot of time in the city, several people close to him say, making it as much his home as Dubai.
Now, he’s staying put in the Gulf and needs to stay on the right side of the ruling family in the UAE, who will be happy to have someone bringing crypto industry conferences and high-profile executives to town, as CZ already has.
Room for Disagreement
Dubai doesn’t want to be the Bahamas, where Bankman-Fried’s FTX was based. After the U.S. Commodity Futures Trading Commission charged Binance in late March, the Emirates crypto regulatory body asked for more information on governance and auditing procedures for all foreign exchanges in the country, including Binance.
The View From Brusssels
A pair of European Parliament members, including one from France, raised concerns about Binance’s approval to operate in Paris last summer. MP Aurore Lalucq specifically mentioned the alleged money laundering activity on the exchange.
Notable
- Read CZ’s Twitter response to the French charges, which he described as a part of a routine regulatory check-in.