The World’s Biggest Crypto Firm Is Melting Down - Kanebridge News
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The World’s Biggest Crypto Firm Is Melting Down

‘Every battle is a do-or-die situation,’ Binance co-founder Yi He writes

By PATRICIA KOWSMANN
Wed, Sep 27, 2023 9:05amGrey Clock 4 min

After FTX crashed, the world of crypto seemed to belong to the largest exchange, Binance. Less than a year later, Binance is the one in distress.

Under threat of enforcement actions by U.S. agencies, Binance’s empire is quaking. Over the past three months, more than a dozen senior executives have left, and the exchange has laid off at least 1,500 employees this year to cut costs and prepare for a decline in business. And while Binance still looms large in crypto, its dominance is dwindling.

Binance now handles about half of all trades where cryptocurrencies are directly bought and sold, down from about 70% at the start of the year, according to data provider Kaiko.

What happens to Binance will have immense implications for the crypto industry because the exchange is so big. Industry players and watchers say other exchanges would fill the void if Binance were to collapse. But in the short term, liquidity in the market could evaporate, driving the price of tokens sharply down.

One institutional trader told The Wall Street Journal that his company has conducted fire drills to withdraw its assets from Binance quickly in the event of a meltdown.

Yi He, Binance’s co-founder and chief marketing officer, vowed to overcome the troubles in a message to Binance staff last month.

“Every battle is a do-or-die situation, and the only thing that can defeat us is ourselves,” she wrote in the message viewed by the Journal. “We have won countless times, and we need to win this time as well.”

Binance is a frequent investor in third-party crypto projects and beyond. Binance has invested in X, formerly known as Twitter. Binance co-founder Changpeng Zhao—or CZ as his 8.6 million X followers know him—is the biggest face of crypto.

“You just can’t quantify what would happen to the industry if Binance disappeared, given it has been responsible for fostering a huge amount of innovation and growth,” said Anthony Georgiades, a general partner at Innovating Capital, a fund that invests in early-growth companies.

The U.S. Justice Department has undergone a years long investigation that could result in criminal charges for Binance and Zhao as well as billions of dollars of fines, according to people familiar with the probe.

Binance also faces a Securities and Exchange Commission lawsuit that alleges it and Zhao operated illegally in the U.S. and misused customers’ funds. The firm has acknowledged past mistakes but says customer money is safe and it is committed to compliance.

“We have worked tirelessly not just to learn the lessons of the past, but also to continue to invest in the teams and systems that ensure user protection,” a spokesman said.

Binance launched in China in 2017, though it claims to be based nowhere, with staff scattered around the world. Its global website is accessible by traders almost everywhere, but that number is falling as its presence has been forbidden in many countries. In Europe, more countries are shutting their doors to the exchange.

In the U.S., activity at its local exchange, Binance.US, has basically dissipated. Its chief executive officer, legal chief and risk head all left recently.

In a virtual Binance.US meeting days before his departure earlier this month, Binance.US CEO Brian Shroder said revenue at the exchange had fallen 70% year to date, according to a presentation viewed by the Journal. Executives looked on with dismay.

Shroder told employees Zhao would need to resolve “his regulatory matters, put his .US holdings in a blind trust, or sell his shares” in order for the U.S. platform to maintain its growth initiative. Those steps would allow the company to unblock banking relationships and get licenses, he said. Zhao is the majority owner of Binance.US and the global exchange.

A spokeswoman for Binance.US declined to comment.

Binance and the DOJ have been talking for months, according to people familiar with the discussions, and inside Binance, there have been discussions on whether Zhao should step down.

Zhao’s insistence in remaining at the helm of the company has frustrated some executives who believed him leaving would improve the chances of the company surviving, the Journal previously reported.

The company upheaval has also hurt employee morale.

Employees confronted Zhao in a summer meeting following layoffs, according to messages viewed by the Journal, in a rare showing of criticism.

“Some ppl laid off were given 0 days notice and/or found out they got laid off because they couldn’t login to the system anymore. How is that treating them respectfully? Is 2 weeks severance respectful?” one anonymous employee asked Zhao in the all-hands meeting chat. Nine others upvoted that. The question went unanswered.

A further stumbling block for Binance came in late August, when the Journal published an article on Binance customers’ use of sanctioned Russian banks. The DOJ has also been investigating Binance in connection with possible violations of U.S. sanctions on Russia, the Journal has reported.

Following the Journal story, the Justice Department questioned Binance about the banks’ usage, and Binance’s chief compliance officer, Noah Perlman, met with department officials to discuss their concerns, a person with direct knowledge of the matter said.

Pressure from the DOJ was partly responsible for Zhao’s decision to begin winding down Binance’s business in Russia, once one of its most important markets, the person said. Over the following two weeks, Binance barred customers from using the sanctioned banks and forced out the executives managing its Russia business. It said it was considering a full withdrawal from Russia.

Zhao publicly remained defiant. “We are one community,” he wrote on X on the day the Russia executives left. “Keep building!”

But behind closed doors, Zhao has been bringing new lawyers to handle the DOJ case, according to people familiar with the move. And Zhao has been staying put in his home in the United Arab Emirates, which doesn’t have a mutual extradition treaty with the U.S.



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I.M. Pei was the confident visionary behind such transformative structures as the Bank of China Tower in Hong Kong and the Louvre Pyramid in Paris, but he was also humble, and for years resisted a retrospective of his work.

Pei, a Chinese-American architect who died in 2019 at 102 , would always protest any suggestion of a major exhibition, saying, “why me,” noting, too, that he was still actively at work, recalls his youngest son, Li Chung “Sandi” Pei. A decade ago, when Pei was in his mid-to-late 90s, he relented, finally telling Aric Chen, a curator at the M+ museum in Hong Kong, “all right, if you want to do it, go ahead,” Sandi says.

A sweeping retrospective, “I.M. Pei: Life Is Architecture,” will open June 29 at M+ in the city’s West Kowloon Cultural District. The exhibition of more than 300 objects, including drawings, architectural models, photographs, films, and other archival documents, will feature Pei’s influential structures, but in dialogue with his “social, cultural, and biographical trajectories, showing architecture and life to be inseparable,” the museum said in a news release.

As a Chinese citizen who moved to the U.S. in 1935 to learn architecture, Pei—whose full first name was Ieoh Ming—brought a unique cultural perspective to his work.

“His life is what’s really interesting and separates him from many other architects,” Sandi says. “He brought with him so many sensibilities, cultural connections to China, and yet he was a man of America, the West.”

Facade of the Bank of China Tower in Hong Kong in a photograph commissioned by M+ in 2021.
© South Ho Siu Nam

Pei’s architectural work was significant particularly because of its emphasis on cultural institutions—from the East Building of the National Gallery of Art in Washington, D.C., to the Museum of Islamic Art in Doha, Qatar—“buildings that have a major impact in their communities,” Sandi says. But he also did several urban redevelopment projects, including Kips Bay Towers in Manhattan and Society Hill in Philadelphia.

“These are all places for people,” Sandi says. “He believed in the importance of architecture as a way to bring and celebrate life. Whether it was a housing development or museum or a tall building or whatever—he really felt a responsibility to try to bring something to wherever he was working that would uplift people.”

A critical juncture in Pei’s career was 1948, when he was recruited from the Harvard Graduate School of Design (where he received a master’s degree in architecture) by New York real estate developer William Zeckendorf.

With Zeckendorf, Pei traveled across the country, meeting politicians and other “movers and shakers” from Denver and Los Angeles, to Philadelphia, Washington D.C., Boston, and New York. “He became very adept at working in that environment, where you had to know how to persuade people,” Sandi says.

During the seven-year period Pei worked with Zeckendorf, the developer fostered the growth of his architecture practice, supporting an office that included urban, industrial, graphic, and interior designers, in addition to architects and other specialists, Sandi says.

When Pei started his own practice in 1955, “he had this wealth of a firm that could do anything almost anywhere,” Sandi says. “It was an incredible springboard for what became his own practice, which had no parallel in the profession.”

According to Sandi, Chinese culture, traditions, and art were inherent to his father’s life as he grew up, and “he brought that sensibility when he came into America and it always influenced his work.” This largely showed up in the way he thought of architecture as a “play of solids and voids,” or buildings and landscape.

“He always felt that they worked together in tandem—you can’t separate one from the other—and both of them are influenced by the play of light,” Sandi says.

View of the National Center for Atmospheric Research, on the mesa, in a photograph commissioned by M+ in 2021.
© Naho Kubota

Pei also often said that “architecture follows art,” and was particularly influenced by cubism, an artistic movement exploring time and space that was practiced in the early 20th century by Pablo Picasso, Georges Braque, and the sculptor Jacques Lipchitz, among others. This influence is apparent in the laboratory at the National Center for Atmospheric Research in Boulder, Colo., and at the Everson Museum of Art in Syracuse, N.Y. “Those two buildings, if you look at them, have a play of solid and void, which are very cubistic,” Sandi says.

Yet Sandi argues that his father didn’t have a specific architectural style. Geometry may have been a consistent feature to his work, but his projects always were designed in response to their intended site. The resulting structure emerged as almost inevitable, he says. “It just was the right solution.”

Pei also intended his buildings “not only to be themselves a magnet for life,” but also to influence the area where they existed. “He never felt that a building stood alone,” Sandi says. “Urban design, urban planning, was a very important part of his approach to architecture, always.”

After he closed his own firm to supposedly “retire” in the early 1990s, Pei worked alongside Sandi and his older brother, Chien Chung (Didi) Pei, who died late last year, at PEI Architects, formerly Pei Partnership Architects. Pei would work on his own projects, with their assistance, and would guide his sons, too. The firm had substantial involvement in the Museum of Islamic Art, among other initiatives, for instance, Sandi says.

Working with his father was fun, he says. In starting a project, Pei was often deliberately vague about his intentions. The structure would coalesce “through a process of dialogue and sketches and sometimes just having lunch over a bottle of wine,” Sandi says. “He was able to draw from each of us who was working on the project our best efforts to help to guide [it] to some kind of form.”

The M+ retrospective, which will run through Jan. 5, is divided into six areas of focus, from Pei’s upbringing and education through to his work in real estate and urban redevelopment, art and civic projects, to how he reinterpreted history through design.

Sandi, who will participate in a free public discussion moderated by exhibition co-curator Shirley Surya on the day it opens, is interested “in the opportunity to look at my father anew and to see his work in a different light now that it’s over, his last buildings are complete. You can take a full assessment of his career.”

And, he says, “I’m excited for other people to become familiar with his life.”