Richard Teng, Binance’s CEO: ‘The crypto industry has changed drastically, but users trust us’

Winds of change are blowing in the world of cryptocurrencies. The long, cold winter that began in May 2022 and that evaporated more than $2 billion of capitalization in the sector appears to have come to an end. The most noticeable sign of this shift is that the scandals involving companies in the sector no longer affect the price of Bitcoin, which started the year above $40,000, a level it had not reached in the last 20 months. The complaints by U.S. regulators against Binance — the most used platform in the world to buy and sell digital assets — and the departure in November of its founder and CEO, Changpeng Zhao, barely shook the market.

“The landscape has changed drastically, but users trust us,” Richard Teng, the new CEO of Binance, tells EL PAÍS. The man who took the reins of this giant with 167 million registered users across almost 50 countries has the difficult task of finding the right balance between highlighting the company’s achievements in its six short but controversial years of existence and turning the page on the turbulence and the scandals to prepare the firm for what it hopes will be an accelerated adoption of cryptocurrencies in a regulated environment.

The controversy is not small. On November 21, the company pleaded guilty to ignoring anti-money laundering regulations while providing services to its clients in the United States. The firm agreed to pay $4.3 billion in fines and to appoint a supervisor for the company’s activities, and Zhao left the company he founded. The firm still faces an individual lawsuit from the U.S. Securities and Exchange Commission (SEC).

“We made mistakes. In terms of compliance, control in those early days [2017] was still inadequate in some areas. As part of the resolution, we acknowledge those mistakes, and we are moving past them.” To differentiate it from other high-profile cases, especially that of FTX founder Sam Bankman-Fried, Teng insists that U.S. regulators found no instances of fraud in the use of his clients’ assets. In addition, he points out that users were able to withdraw their investments from the platform at all times, unlike other cases, such as the Luna stablecoin.

Teng is also facing the challenge of shedding the messianic style that prevailed among the major players in the sector until now. “[Zhao] has been a very inspirational founder CEO. He has done a lot of things for the industry,” he says, hesitating for a moment about which verb tense to use. The profiles of both managers could not be more different: while the previous CEO conducted himself like a great celebrity, a guru on par with other icons in the sector, Teng prefers humility and a discourse clearly modulated by his communication team. With constant references to the staff that accompanies him in the task of maintaining the firm, as well as to his experience in the regulatory sector, working in Abu Dhabi and Singapore before joining Binance in 2021, he makes it clear that the narrative will not be the same.

The change in the discourse of the sector is so radical that it no longer seeks to antagonize traditional financial entities, with which Binance competes by offering payment services, paid deposits and investments. “We need institutional adoption. [This will bring] new research, new investments, new products and services and a new pool of liquidity,” highlights Teng, who also sees the presence of large banks and fund managers such as BlackRock or Fidelity in the sector as beneficial. The expectation of an upcoming approval of the first Bitcoin exchange-traded fund (ETF), which the international press expects in January 2024, motivates the CEO, who believes that it will be a “net positive for the industry.” The United Kingdom banned Binance from operating in the country in 2021, considering that it was carrying out activities without the proper regulatory permission.

The traditional defiant discourse only remains when viewed through the lens of the traditional press, which he criticizes for its coverage of money laundering, stating that “the media chooses to report on one aspect.” This, according to the leader of Binance, leaves out the fact that “blockchain is a traceable technology” and that the company receives “50,000 law enforcement requests for cooperation” every year. Their core mission of supporting “the freedom of money” is undoubtedly tied to the future of regulation.

A new sector

In his diagnosis of what happened, Teng is aware that the company walked a fine line where it put its survival at stake. “For the first few days, there was a net outflow of funds from the Binance platform. However, that has changed: we have seen very robust inflows, and our user base continues to grow,” he states.

This is not exclusive to Binance. Since October, the sector has experienced a streak of 11 consecutive weeks of inflows, according to data from the firm CoinShares, with digital currency exchanges worth $3.6 billion during the previous week. Trading volume on Binance has also increased every month since September, according to information from consulting firm CCData, although its market share has fallen 20 percentage points since the beginning of the year.

“Users trust us,” Teng repeats like a mantra, despite the problems of the past. He emphasizes that the exchange has always been consistent with its commitment to the users and that their clients have always been able to withdraw their savings at will. He distances himself from the fall of other major players in the sector (whom he avoids naming) by highlighting that their corporate structure remains debt-free while showing profits and their expenses remain low.

One of the first controversies around Teng’s leadership has been his refusal to reveal the location of Binance’s global headquarters, keeping in accordance with Zhao’s policy in this regard. “We have already announced our regional headquarters. France is our regional headquarters for Europe. Dubai is our regional headquarters for the Middle East-North Africa region. When we are ready to make that announcement, we will do so. But we are a global company. We do global deployment.”

The company’s global nature and ambition is both a weakness and a strength. Teng notes that Binance is regulated in 18 different jurisdictions, each with a greater or lesser form of regulation. “This disparity of rules and requirements make it challenging. The rules are in conflict with one another,” he explains. “Hopefully, over time we will get some harmonization of standards” to make things easier for global exchanges like them.

Teng celebrates the approval of the new European regulation for cryptocurrencies, with which they will be able to avoid the individual permission of each of the 27 member countries, using a single “community passport” instead. This would prevent new problems, such as those the company faced in the middle of the year, when it was forced to suspend its operations in the Netherlands and Cyprus and to withdraw its license application in Germany and Austria.

The community standard will not come into effect until the end of 2025, but the firm intends to be prepared. Teng insists that in the last two years the platform has invested almost $400 million in its compliance program with the aim of being above any other actor. However, other voices in the sector warn that greater spending does not necessarily translate into more effective policies.

In a sector characterized by speculation and volatility, Teng embraces caution and avoids any type of forecast about what may happen to the prices of the main digital currencies. “A bigger pie,” he assures, is the recipe to ensure the future of Binance. “We have been focusing on building a vibrant ecosystem. You can bring crypto adoption from 5% to 20%.” At this point, he goes back to the central nature of the user, which, he says, was the key to the company’s strength.

Whether Binance will be able to navigate an industry in full transformation without falling into nostalgia, it remains to be seen. With Zhao away from the company that he founded and awaiting the ruling of the American courts, the firm must come up with a new manual, away from the big events and the controversies that move at the speed of Twitter. Teng, for his part, concludes the conversation emphasizing his optimism. The preponderance of the exchange endows him with another responsibility: it will also be up to him to establish a new model of business leadership for the crypto world.

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