Cryptocurrency Exchange

How CZ built Binance and became the richest person in crypto

CZ first came across Bitcoin in 2013 and was a bit hard by the BTC bug, which led him to sell his house in Shanghai and go all-in.

Changpeng “CZ” Zhao, the founder and CEO of global cryptocurrency exchange Binance, is one of the most influential crypto personalities today, but his story is a true rags-to-riches one.

CZ was born in a village in Jiangsu, Shanghai, and his family migrated to Vancouver, Canada, in the 1980s when he was 12. He studied computer science engineering in college and spent the next few years building trading systems for popular exchanges such as the Tokyo Stock Exchange and Bloomberg Tradebook.

CZ left his lucrative job in 2005 to start his own venture and moved back to Shanghai. In 2013, after eight years of building his company, CZ finally came across Bitcoin (BTC) — which changed everything for him.

The Bitcoin bug bit CZ hard, and he went all-in on the nascent digital currency in 2014, selling his house and buying BTC at an average price of $600 per coin. Bitcoin’s price fell soon after and crashed to $200, but CZ’s belief in the tech helped him hodl through the bear market. After two years, the price jumped back up.

CZ started his own crypto venture nearly four years after coming across Bitcoin, launching Binance in July 2017 at the peak of the initial coin offering era. Five years later, Binance is one of the leading global crypto exchanges in terms of daily trading volume.

Check out the full story on Cointelegraph’s YouTube channel, and don’t forget to subscribe!

3Commas issues security alert as FTX deletes API keys following hack

3Commas and FTX conducted a joint investigation in relation to reports from users of unauthorized trades on the DMG trading pairs on FTX.

Automated crypto trading bot provider 3Commas issued a security alert after identifying certain FTX API keys being used to perform unauthorized trades for DMG cryptocurrency trading pairs on the FTX exchange.

3Commas and FTX conducted a joint investigation in relation to reports from users of unauthorized trades on the DMG trading pairs on FTX. The duo identified that hackers used new 3Commas accounts to perform the DMG trades adding that, “The API keys were not taken from 3Commas but from outside of the 3Commas platform.”

A subsequent investigation found fraudulent websites posing as 3Commas were being used to phish API keys as users linked their FTX accounts. The FTX API keys were then used to perform the unauthorized DMG trades.

3Commas further suspects that hackers used 3rd-party browser extensions and malware to steal the API keys from users, adding:

“To reiterate and clarify, there has been no breach of either 3Commas account security databases or API keys. This is an issue that has affected multiple users who have never been customers of 3Commas so there is no possibility that it is a leak of API keys originating from 3Commas.”

Both FTX and 3Commas identified suspicious accounts based on user activity and suspended the API keys to avoid further losses.

A set of guidelines shared by 3Commas for user’s safety. Source: 3Commas

FTX users that have connected their accounts with 3Commas and receive a message regarding their API being “invalid” or “requires updating” must create new API keys. In such cases, 3Commas suggested that:

“It is possible your API details were compromised and the API key has been deleted by FTX.”

Users have the option to create a new API key on FTX and link it to their 3Commas account to ensure no disruption to active trades.

3Commas are currently working with the victims to provide assistance and gather more information about the hackers.

Related: Voyager customers could recover 72% of frozen crypto under FTX deal

FTX recently partnered with Visa to roll out debit cards in 40 countries worldwide. The partnership allows FTX users to pay for goods and services using debit cards that boast “zero fees” and no yearly charges.

The market reacted to the development as the FTX token spiked 7%, momentarily reaching a trading price of $25.62.

Gate.io users at risk as scammers fake giveaway on hacked Twitter account

The fake website is actively promoting a fake giveaway of 500,000 USDT while asking users to connect their wallets (such as MetaMask) to claim the rewards.

Hackers took over the official Twitter account of crypto exchange Gate.io, putting over 1 million users at risk of losing funds to an ongoing fraudulent Tether (USDT) giveaway.

Social media platform Twitter serves as the most effective medium to reach the crypto community. As a result, the trend of hacking into official Twitter handles of verified accounts to promote scams is on the rise.

Hackers of unknown origin took over Gate.io’s Twitter account and changed the website URL from Gate.io to gąte.com (https://xn--gte-ipa.com/) — a fraudulent website impersonating the exchange.

The fake website is actively promoting a fake giveaway of 500,000 USDT while asking users to connect their wallets (such as MetaMask) to claim the rewards. Once a user connects their wallet to the fake website, the hackers will gain access to their existing funds and end up draining the assets.

Blockchain investigator Peckshield also confirmed the ongoing attack as it detected the phishing website and alerted users about the risk of losing private keys.

Cointelegraph reached out to alert officials about the ongoing hack and is to hear from Gate.io about related remediation. In response, Gate.io confirmed with Cointelegraph that all users had been alerted about the compromise and released a post about the development, adding that:

“We were made aware as soon as it happened, we have put out a notice and the account was locked down soon after being compromised.”

At a time when crypto scams are set to hit all-time highs, investors are advised to cross-check the website URLs of the trading platforms to ensure the legitimacy of the offerings.

Related: Mango Market’s DAO forum set to approve $47M settlement with hacker

The United States Federal Bureau of Investigation (FBI) recently warned that crypto ATMs are gaining popularity among scammers to receive funds from victims.

According to the FBI, wire transfers, prepaid cards and crypto ATMs are being used by scammers to avoid being tracked by law enforcement:

“Many victims report being directed to make wire transfers to overseas accounts or purchase large amounts of prepaid cards. The use of cryptocurrency and cryptocurrency ATMs is also an emerging method of payment. Individual losses related to these schemes ranged from tens of thousands to millions of dollars.”

As victims agree to pay up, the scammers ask victims to pay taxes over the original amount, “causing them (investors) to lose additional funds.”

New York-based forex broker Oanda launches crypto trading services in US

The broker’s partnership with Paxos will enable U.S.-based investors to spot-trade cryptocurrencies on Paxos’ itBit exchange through Oanda’s mobile platform.

New York-based multi-asset trading services Oanda has launched a new cryptocurrency trading service in the United States. This latest addition, developed in partnership with regulated blockchain infrastructure provider Paxos Trust Company, is designed to give investors easy access to crypto alongside their existing forex portfolios in a secure environment. 

The collaboration will enable U.S.-based investors to spot-trade cryptocurrencies on Paxos’s itBit exchange through Oanda’s mobile platform, the broker said. Investors will be able open and fund trading accounts, as well as access major cryptocurrencies such as Bitcoin (BTC) and Ether (ETH). According to Oanda, users will benefit from the company’s long track record in the forex and derivatives markets.

Oanda’s partner Paxos is a regulated blockchain infrastructure provider that uses technology to tokenize, trade and settle assets. Paxos builds enterprise blockchain solutions for companies like PayPal, Interactive Brokers, Meta, Mastercard, MercadoLibre, Nubank, Bank of America, Credit Suisse and Societe Generale.

Gavin Bambury, the chief executive officer of Oanda, said the partnership with Paxos gives his firm a regulated partner in which to grow its crypto offerings.

Oanda executive Jessica Bestead said the decision to offer crypto trading services was “in response to the needs of active traders,” a sign that more market participants were looking to gain exposure to digital assets.

Related: Mobile bank N26 launches cryptocurrency trading with Bitpanda partnership

Founded in 1996, Oanda claims to be the first company to share exchange rate data free of charge on the internet, launching a forex trading platform that helped to pioneer the development of web-based currency trading five years later.

In recent years, platforms offering foreign exchange trading and other traditional assets have broadened their services to include crypto. As reported by Cointelegraph, major U.S. trading platform Interactive Brokers entered the crypto market in mid-2021 to capitalize on the growing demand. Former forex brokers from Jeffries Financial Group also launched a new crypto exchange for institutional investors.

Crypto Biz: Bear market claims another casualty

German crypto bank Nuri joins a growing list of crypto service providers to shutter their doors permanently amid the bear market.

Three Arrows Capital. Celsius. Voyager Digital. The list of crypto bankruptcies, shutdowns and trading freezes has been endless in 2022. And the year isn’t over yet. This week, German crypto bank Nuri urged its users to withdraw funds ahead of the company’s planned shutdown in December — at least Nuri’s users were given proper notice. 

The crypto bear has been relentlessly cleansing the market of excess, leverage, poor risk management and outright scams. If industry prognosticators are to be taken seriously, the market could see one final capitulation before conditions begin to improve.

This week’s Crypto Biz chronicles Nuri’s shutdown, the latest drama surrounding Voyager Digital and Silvergate Capital’s difficult quarter.

German crypto bank Nuri tells 500K users to withdraw funds ahead of shutdown

After disclosing liquidity issues in August, Nuri informed its 500,000 users this week that it would cease operations on Dec. 18. That gives users two months to withdraw their funds before the company unwinds its operations due to the bear market. Nuri CEO Kristina Mayer assured users that “All assets in your Nuri account are safe and unaffected by Nuri’s insolvency.” Nuri going bust isn’t good for the industry, but they handled it much better than Celsius, which locked user withdrawals before filing for bankruptcy.

Voyager Digital won’t sue its executives for incompetence, will claim insurance on them

The Voyager Digital saga took another surprising turn this week after the company opted not to sue its executives for incompetence for their role in facilitating the Three Arrows Capital debacle (and Voyager’s in the process). For those not up-to-date on the drama: Voyager issued a $675 million loan to Three Arrows Capital without proper due diligence. That loan was never paid back and became a key element in Voyager’s bankruptcy. So, why aren’t the executives being sued? According to reports, they received immunity from the lawsuit when Voyager’s assets were acquired by FTX US via auction in late September.

Silvergate Capital’s crypto-to-fiat transfers decrease by $50B compared with Q3 2021

Few stats convey just how brutal crypto winter has been than Silvergate Capital’s crypto-to-fiat transfers. The company disclosed this week that transfers on its network plunged by $50 billion year-over-year in Q3, which is an alarming sign for those banking on crypto mass adoption among financial institutions. But, there was a silver lining: Silvergate’s profits rose 84% year-over-year to $43.328 million. Investors responded to the news by dumping Silvergate shares, which plunged 20% on Oct. 18.

Binance launches $500M lending project to support crypto miners

Crypto exchange Binance is launching a new $500 million lending project to finance cash-strapped Bitcoin (BTC) miners during the bear market. The new Binance Pool will give miners access to loans over an 18-to-24-month term, where they will pay 5% to 10% in interest and put up physical or digital assets as security. Only “blue-chip” miners can qualify for the loan. “One of the requirements is that the applicant must be classified as a Binance VIP user and connect at least 500 PH/s to the Binance Pool for a minimum of 24 months after the loan is issued,” a Binance spokesperson told Cointelegraph.

Before you go: When will the crypto bear market end?

Are you sick and tired of the crypto bear market? How much longer until the market turns? While nobody has a crystal ball, I remain steadfast in my belief that Bitcoin will likely see a cyclical bottom in the next few months, followed by a prolonged accumulation phase. In this week’s Market Report, I sat down with fellow analysts Marcel Pechman and Benton Yaun to discuss crypto’s short-term outlook. You can watch the full replay below.

Crypto Biz is your weekly pulse of the business behind blockchain and crypto delivered directly to your inbox every Thursday.

Kraken crypto exchange is next to close doors to Russian users

Former Kraken CEO Jesse Powell previously warned crypto investors about the risks of holding crypto on a centralized exchange.

Kraken is the latest cryptocurrency exchange to restrict accounts of Russian users on its platform in compliance with sanctions from the European Union.

On Oct. 19, Kraken sent out email statements to its Russian clients to announce that the exchange is halting services to its Russian customers.

“Due to the new European legislation, we have to take measures to restrict your Kraken account,” the company said. According to an email statement seen by Cointelegraph, Russian users would be able to withdraw their funds by request.

“We will update our support center if there are any changes,” Kraken noted, adding: “We apologize for the inconvenience caused.”

Kraken didn’t specify whether there’s a time limit to withdraw the funds from the exchange for Russian citizens. A spokesperson for Kraken told Cointelegraph that the firm complies with the “legal and regulatory requirements in all jurisdictions” of its operations. “Since the EU’s announcement, we have been working to make the changes needed to comply with the latest package of sanctions against Russia,” the representative noted.

The latest restrictions on Kraken are not the first time the exchange has dealt with regulators forcing centralized exchanges to shut down certain accounts.

In February 2022, former Kraken CEO Jesse Powell condemned the Canadian authorities for freezing crypto wallets involved in funding local COVID-19 protests. He explicitly warned the public that Kraken could be forced to freeze some wallets by regulators, advising crypto investors to move crypto out of exchanges.

“If you’re worried about it, don’t keep your funds with any centralized or regulated custodian. We cannot protect you,” Powell said at the time.

Powell also responded to Ukraine’s call to block Russian users’ addresses on crypto exchanges, saying that Kraken would no do that without a legal obligation:

By restricting Russian users on its platform, Kraken joins the increasing number of global crypto exchanges and wallets that stopped servicing Russians in compliance with the latest EU sanctions against Russia.

As previously reported, several crypto firms, including Blockchain.com, Crypto.com and LocalBitcoins, have ceased operations for Russians.

Related: Russian users are welcomed by crypto exchanges in Kazakhstan, but there’s a catch

Bitfinex, one of few exchanges that previously opposed banning non-sanctioned Russians from using its platform, appears to have been forced to comply with sanctions as well.

“We comply with all the regulations under which we are bound and are monitoring this situation closely,” Bitfinex’s senior PR manager, Joe Morgan, told Cointelegraph on Oct. 20. Bitfinex chief technology officer Paolo Ardoino previously recommended that investors use noncustodial hardware wallets to better protect their funds.

The new crypto sanctions are part of the EU’s eighth package of sanctions that were imposed on Oct. 6. The sanctions put a blanket ban on any crypto transactions and payments between Europe-regulated companies and Russian users. The EU initially adopted its first crypto sanctions against Russia in April, limiting Russian users or residents from trading if their holdings exceeded 10,000 euros ($10,000) at the time.

Binance delegates 13.2M UNI tokens, becoming Uniswap DAO’s second-largest vote-holder

This move will allow Binance to propose governance votes, but is not enough to meet the quorum 4% requirement.

Crypto exchange Binance is now the second-largest entity by voting power in the Uniswap DAO, sitting just behind the venture firm Andreessen Horowitz, or a16z, according to the on-chain list of delegates. 

On Oct. 18, Binance delegated 13.2 million UNI (UNI) tokens from its own books, which represents 5.9% of the voting power — a percentage of tokens delegated to the exchange. Compared to the total supply of UNI, the amount delegated represents 1.3%.

The move will allow Binance to propose governance votes, as it exceeds a threshold of 0.25%, but it’s still below the 4% quorum requirement to pass votes. A recent governance vote reduced the threshold for proposing votes.

On Twitter, Uniswap’s CEO, Hayden Adams, labeled the change as a “very unique situation, as the UNI technically belongs to its users.”

Adams also claimed that it’s unclear how Binance intends to engage with Uniswap decisions, stating that “Binance users would prob prefer to keep these gov rights (similar to what compound has done with cUNI).”

Adams also called on Binance CEO Changpeng “CZ” Zhao to speak about the company’s plans “in the spirit of transparency.” CZ did not respond to Adams’s questions or other users’ inquiries at the time of publication.

Uniswap disclosed on Oct. 13 a $165 million Series B funding round led by Polychain Capital with additional existing investors, including Andreessen Horowitz, Paradigm, Variant and SV Angel. According to the company, the funding will be used to expand its existing product offerings and improve user experience through new web applications, developer tools and a shift toward mobile. The company also intends to launch nonfungible tokens (NFTs) projects in the future. 

The decentralized exchange became prominent during the decentralized finance hype in 2020. The cumulative trade volume of Uniswap surpassed $100 billion for the first time in February 2021. The cumulative volume of the platform’s trading has grown to $1.2 trillion, according to Adams.

Cointelegraph reached out to Binance, but did not receive a response as of the time of publication.

ShapeShift moves closer to full decentralization with open-source mobile app

The organization transitioned to a DAO in July 2021 as part of a broader pledge to decentralize its operations.

ShapeShift, a noncustodial crypto exchange and decentralized autonomous organization (DAO), has taken additional steps toward complete decentralization by migrating users to a new open-source application — a move the organization said would enhance user mobility.

The organization announced that as of Oct. 19, all native web users of the ShapeShift platform have migrated to a decentralized version of the application. The announcement also coincided with the release of a new mobile app that the organization said would provide an “authentic DeFi universe” experience. The new mobile app is said to provide users with additional flexibility, mobility and features when connecting their wallets and trading crypto.

Willy Orgorzaly, who heads decentralization for the Fox Foundation said the mobile app is “fully open source” and that “the only backend is blockchain data,” which is also in the process of being decentralized.

As part of its decentralization efforts, ShapeShift has expanded user options for investing and managing digital assets. It has also pledged to permanently erase users’ data once the company’s centralized infrastructure is fully wound down.

As reported by Cointelegraph, ShapeShift announced its plans to decentralize its entire operations in July 2021. The decentralization pledge also included a massive airdrop of FOX tokens, the native asset of the ShapeShift platform, to over 1 million users. In the following months, the organization issued multiple airdrops and fully open-sourced its v2 platform code.

Related: Tech’s good intentions and why Satoshi’s new ‘social order’ foundered

While decentralization has been at the heart of the Bitcoin (BTC) revolution, the crypto industry does not uniformly accept the concept or apply it effectively. New efforts to promote decentralization have emerged within Web3, a broad concept that refers to some future iteration of the internet.

Japanese regulators loosen crypto laws and make it easier to list coins

The Japan Virtual and Crypto Assets Exchange Association says it plans to make it easier for authorized exchanges to list digital currencies by loosening the screening process.

The Japan Virtual and Crypto Assets Exchange Association, the governing body that deals with crypto assets in Japan, released documents of plans to further ease crypto laws in the country. 

According to a Bloomberg report, as early as December of this year, the association wants to implement a looser screening process for already authorized exchanges to list virtual coins. However, this would apply to tokens that are not new to the Japanese market.

The regulators could abolish the lengthy pre-screening process altogether, even for coins new to the market, by March 2024. This scenario could also include tokens issued through initial coin or exchange offerings, according to comments by Genki Oda, the association’s vice president.

Oda said of the association’s latest announcement:

“We hope the latest measure will help revitalize Japan’s crypto assets market.” 

These new steps from Japanese regulators come in the hopes of revamping the local crypto scene and making it easier for startups to get a foot in the door. 

Related: Japan’s crypto self-regulation ‘experiment’ not working

The Japanese government passed a cabinet decision to revise laws related to money laundering on Oct. 14. This means that businesses that facilitate the exchange of crypto assets must provide user information and notify the business operators.

Recently, Japan has been considering the growing crypto scene as the government revises laws and regulations. In August, officials said they will consider implementing tax reforms to prevent crypto startups from leaving.

This came shortly after Japanese crypto groups called on regulators to end taxing paper gains.

Japanese Prime Minister Fumio Kishida said the government will be making an effort to promote the use of new Web3 technologies in a speech on Oct. 3. Specifically, he mentioned the usage of nonfungible tokens (NFTs) and the Metaverse.

In September of this year, the government of Japan issued NFTs as rewards for good work to local authorities.

Cameron Winklevoss steps down from Gemini’s European board

Despite the shift, Cameron and Tyler Winklevoss continue to run the cryptocurrency exchange’s global operations.

Cameron Winklevoss, a co-founder of cryptocurrency exchange Gemini, has stepped down from the European company board of directors, according to a Companies House filing from Oct. 12.

As indicated in a statement sent to a London publication, Cameron continues to lead Gemini’s global operations alongside his twin brother, Tyler Winklevoss:

“We can confirm this change was filed with Companies House and brings local leadership onto the board of directors to reflect the growth of Gemini’s business in the UK and Europe. Cameron and Tyler Winklevoss continue as President and CEO at Gemini.” 

As per the filings, Gillian Lynch, the head of Gemini in Ireland and Europe, is taking Blair Halliday’s seat on the board. Blair was the U.K. managing director at Gemini for two years before moving to rival exchange Kraken this month, according to his LinkedIn profile.

In July, Gemini announced its registration as a virtual asset service provider (VASP) by the Central Bank of Ireland (CBI) after having received an electronic money institution (EMI) authorization from the CBI that allowed the company to issue electronic money, provide electronic payment services and handle electronic payments for third parties months before.

In June, the United States Commodity Futures Trading Commission filed a lawsuit against Gemini claiming that the company made false or misleading statements in 2017 during in-person meetings and in documents, violating the Commodity Exchange Act and other regulations.

The agency was making an evaluation of the potential self-certification of a Bitcoin (BTC) futures contract to be based on the spot Bitcoin price determined by an auction held on Gemini’s digital asset trading platform.

Also this year, the exchange laid off over 10% of its staff as part of “extreme cost-cutting” during the crypto winter, just two months after the company’s co-founders were featured as crypto billionaires by Forbes, with fortunes of $4 billion each.

Cointelegraph reached out to Gemini but did not receive a response as of the time of publication.