So, another day another downfall of a cryptocurrency mogul. Changpeng Zhao also known as ‘CZ’, the CEO of the largest cryptocurrency exchange in the world, Binance was forced to step down in November 2023 after pleading guilty to money laundering charges.
This spectacular fall from grace resulted in a $50 million personal fine and a $4.3 billion fine for Binance.
But what can entrepreneurs learn? Here goes…
Rules matter
CZ was accused of allowing transfers to clients on the international sanctions list and multiple counts of money laundering to criminals, militant organisations, Hamas and other suspect organisations. CZ admitted a failure to hold adequate money laundering procedures. He faces up to 18 months in jail.
What can entrepreneurs learn? Entrepreneurs need and love to disrupt but there’s a fine line between shaking up the status quo and breaking the law. So it’s vitally important that entrepreneurs take note of the important regulations within their industry. Just because an industry is relatively new, like crypto doesn’t mean existing laws don’t apply.
Own your mistakes
CZ is reported to have said, “I’ve made mistakes and I must take responsibility, this is best for our community”. This is an amazingly candid response and unusual for a CEO of a large organisation. Especially in the crypto industry where greed and self-preservation are rife and often rewarded. You have to respect CZ for his honesty here and his awareness that his decisions have an impact on the wider community.
What can entrepreneurs learn? As a founder, you are going to make mistakes, we all do. Don’t be afraid to admit them, apologise and move on. Try not to be bogged down in the future by past issues that have been swept under the rug. They will eventually come to the surface. As a founder, many are relying on you, be it customers, suppliers or staff. Think of your impact on those individuals’ lives and try and make it positive.
Know when to call it a day
CZ did the honourable thing and stepped down. By doing this promptly it allows Binance to follow a new path of compliance under new leadership. There was no chance of this with CZ at the helm. In the beginning, every start-up needs a founder who will shake things up and get things moving but inevitably as the company grows it will become too big for the scrappy entrepreneur and established professional leadership will be required.
What can entrepreneurs learn? As your business grows, it will be tempting to cling on no matter what. Ensure you are emotionally intelligent enough to understand when the business has outgrown you. At that point, you need to step back to place someone in charge who is better than you.
Take a break
CZ has stated that; “I have not had a single day of real (phone off) break for the last 6 and half years”. He intends to spend some time to rest and maybe help some start-ups along the way advising them on what ‘not to do’. Unfortunately for CZ, the DOJ may have other plans. They have prevented him from leaving the US and could push for imprisonment of up to ten years.
What can entrepreneurs learn?: Ensure you take a break every now and then. Switch the phone off, close the laptop and chill out. You never know it may help with new ideas or decision-making.
Final thoughts
Yet another crypto ‘king’ falls from grace. Much like Sam Bankman Fried, CZ could face jail time. CZ has acted with relative poise and humility by handing himself in and admitting his wrongdoing. However, he simply made the wrong choices and may pay dearly with his freedom.
Entrepreneurs should understand that running a company holds serious consequences if you get it wrong. There will be no sympathy if you ‘disrupt’ too far.
***Disclaimer: This article is not financial advice and is given for informational and entertainment purposes only. Readers should conduct their own research and not invest more than they can afford to lose. Crypto is extremely volatile, and as such can drop in value considerably without notice. Pop Up World has a global presence and is not specifically targeting any jurisdiction with its content. Any crypto references are not intended for UK businesses or consumers. You should always seek legal advice to understand if the use or investment in crypto is allowed in your jurisdiction.
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