CEO Changpeng “CZ” Zhao’s mysterious affiliate Guangying Chen emerges as a key participant in his firm’s operations, that are the topic of a current lawsuit from the SEC.
By John Hyatt, Giacomo Tognini, David Jeans, and Sarah Emerson, Forbes Employees
In the U.S. Securities and Change Fee’s sprawling lawsuit in opposition to crypto trade Binance and its founder Changpeng Zhao, one title seems time and again: Guangying “Heina” Chen.
When Binance arrange its U.S. entity in 2019, it was Chen’s title listed because the signatory of its financial institution accounts. When Zhao arrange a secretive firm in Switzerland to allegedly artificially inflate the quantity of crypto property on Binance.US, it was Chen’s title on the financial institution accounts and onboarding paperwork. Within the SEC’s grievance filed in opposition to Binance alleging “fraudulently inflated buying and selling volumes,” the company refers to a “Again Workplace Supervisor” executing the phony trades: Once more, Chen.
Chen seemingly has no official title at Binance or seen public presence, although Binance paperwork obtained by the SEC describe her job as “finance director.” The corporate hadn’t publicly acknowledged Chen’s existence in any respect earlier than posting a weblog by Zhao final September that downplayed her function as overseeing “admin and clearing.” Nonetheless, a Forbes investigation discovered that Chen has managed extra financial institution accounts and served as a director at extra Binance entities than every other govt apart from CEO Zhao.
She is at present a director of 8 key Binance corporations and was a signatory for dozens of financial institution accounts belonging to 27 entities registered in 13 international locations, overseeing the corporate’s treasury and a spiderweb of corporations that has processed $148 billion in deposits and withdrawals since 2019, in accordance with the SEC. The financial institution accounts, held at Signature Financial institution and Silvergate Financial institution—each of which collapsed in March—had been all closed or had balances of zero by Could this 12 months.
“Heina is the individual CZ trusts,” stated a former Binance govt who labored alongside Chen and Zhao. “She is the gateway of the Binance treasury.”
Courtroom data, land deeds and company filings from China, Malta, Singapore, Switzerland and Turkey reviewed by Forbes, and 4 former Binance staff and an exterior advisor who’ve recognized or labored with Chen, paint a portrait of an elusive crypto chief who has adopted Zhao around the globe. Whereas paying herself at the least $32 million since 2019, in accordance with courtroom filings, Chen has had log out on a few of Binance’s most questionable and consequential enterprise transactions, overseeing trades to allegedly artificially pump up the volumes of buying and selling on the platform to drum up buyer and investor curiosity—a key focus of the SEC’s fraud allegations. She additionally performed a vital function overseeing a number of entities that Zhao used to fund his lavish way of life, together with purchases of a $55 million jet and an $11 million yacht, in accordance with the SEC.
“[Chen] is the gateway of the Binance treasury.”
Such transactions are actually on the middle of Binance’s regulatory woes, with sprawling inquiries by the SEC and Commodity Futures Buying and selling Fee. The trade is also reportedly facing a Division of Justice investigation over claims that Binance or its executives ran afoul of Russian sanctions and anti-money laundering legal guidelines, and Senator Elizabeth Warren has called for the DOJ to open an investigation into claims the corporate lied to Congress. (Binance responded to Warren’s letter by stating that the corporate “helps america’ effort to look holistically at rules” and “takes the difficulty of compliance very critically.”)
In a statement released on June 5, Binance stated it was “dissatisfied” by the SEC grievance and that the corporate will “vigorously defend in opposition to any allegations” that consumer property on Binance.US had been put in danger. Neither Chen nor the corporate responded to a request for touch upon this story.
Whereas Zhao’s crypto empire has to this point survived the implosion of its largest competitor FTX and the contagion that introduced down crypto lenders Celsius and Genesis, it’s now going through existential threats. Binance, which claims to haven’t any headquarters, has already withdrawn from or been banned in at the least 10 international locations. In April, Australian authorities canceled the financial services license of Binance’s Australian subsidiary, resulting in it being dropped by its funds supplier. In Could, Ontario’s Securities Fee launched an investigation into whether or not Binance was circumventing the province’s securities regulation, prompting Binance to withdraw from Canada two days later after which file an utility in search of to revoke the investigation.
Because the SEC costs turned public, Binance buying and selling volumes have fallen by 32%. Within the U.S., the place Binance serves greater than 5 million clients, volumes have fallen by greater than 75% and the SEC has requested a freeze on greater than $2.6 billion in property, successfully halting Binance’s operations in its largest market. Binance suspended all U.S. greenback deposits for its U.S. arm final week.
“The [SEC’s] not excited by a decision that’s going to allow Binance to do enterprise in something near its present kind,” says Renato Marrioti, a former prosecutor with the Division of Justice’s Securities & Commodities Fraud division.
Regardless of the headwinds, Zhao continues to be one in all crypto’s wealthiest; Forbes estimates he’s value at the least $10 billion, although that quantity might be considerably larger, relying on how a lot of Binance’s income Zhao has saved for himself. The SEC data and company filings in 30 jurisdictions reviewed by Forbes point out that Zhao owns 100% of Binance’s worldwide enterprise and 81% of Binance.US.
“[Chen] was the true CFO.”
The secretive Chen stays on the helm of Zhao’s and Binance’s property. “Heina had all controls,” stated one former Binance govt. “[Zhao] trusted only a few folks with entry to cash.”
In a single occasion, the place Binance tried and failed to accumulate a financial institution in Liechtenstein, Binance’s then-CFO Wei Zhou negotiated the deal and met with native regulators. Nevertheless it was Chen who wired $5 million into escrow from a Binance checking account held with Liechtenstein-based Financial institution Frick & Co., in accordance with two folks with information of the deal and financial institution paperwork seen by Forbes. And it was Chen’s DocuSign signature (signing below her nickname, “Heina”), not Zhou’s, on an attestation kind reviewed by Forbes of Binance’s property and liabilities that was shared with Liechtenstein’s regulatory physique. (Zhou didn’t reply to Forbes’ request for remark).
“It is all together with her,” one of many sources added. “She was the one wanted when it got here to fund transfers or fund affirmation letters, no matter—as a result of she is the approved individual for all financial institution accounts.”
“She was the true CFO,” the supply stated.
Little is thought about Chen’s life earlier than Binance. Based on her LinkedIn, she earned an undergraduate diploma in accounting from the Shanghai College of Finance and Economics and an MBA from the Nationwide College of Singapore.
Although Chen’s had an outsized function at Binance since its inception in 2017, the corporate solely acknowledged her existence in response to a reporter’s query final September. In a blog post titled “Who Is Guangying Chen, and Is Binance a ‘Chinese language Firm’?” Zhao wrote that he had met her in 2010 “when she was working at [his] good friend’s wine retailer.” Chen additionally provided alcohol for poker nights he hosted in Shanghai, in accordance with a former Binance govt. “He modified her life,” the previous govt added.
Within the weblog publish, Zhao says that Chen went on to handle again workplace capabilities at a “massive business financial institution” earlier than he employed her to work at his new crypto firm Bijie Tech, a cloud-service startup that offered software program to assist crypto exchanges. There, she would “handle the again workplace because the early group was primarily engineers,” Zhao wrote, saying that he’d put in her, a Chinese language nationwide, as a listed consultant “due to restrictive legal guidelines in China surrounding foreigners (like [him,] a Canadian citizen).”
“[Chen] moved wherever [Zhao] went.”
Chinese language company data reviewed by Forbes present that whereas Zhao was listed as CEO of the corporate, Shanghai Bijie Community Know-how Co. Ltd., it was Chen who managed it on paper. She held 93% of the shares and was listed as each founder and sole authorized consultant.
After Bijie shuttered when its trade purchasers had been reportedly forced to close due to rampant scams, Zhao launched Binance in Shanghai in 2017. Once more, company filings in China present that the agency was established below Chen’s title because the authorized consultant, together with her holding 80% of its shares.
Rumors that Chen secretly managed Binance started to flow into in 2020, after the good friend of a disgruntled Binance buyer put the corporate on blast within the Chinese language social networking app Weibo, claiming his good friend had misplaced 167 bitcoins on the platform. A number of Chinese websites printed his publish and the emails his good friend obtained from Chen, the place she warned that “such actions in your half could also be thought-about malicious to us, and we could reply to such assaults with prosecution for harm to our status, manipulation of public opinion, and even defamation.”
Chen seems to have had various titles at totally different instances. On her LinkedIn, she states that she’s “answerable for the center and again workplace, together with finance / HR / admin / clearing, and many others,” and lists her title as “Co-Founder” of “the Firm,” however doesn’t reference Binance by title. In Telegram messages seen by Forbes, former Binance CFO Wei Zhou referred to as her Zhao’s “private finance supervisor.” Within the 2020 attestation kind shared with Liechtenstein regulators, Chen listed her title as “Head of Backoffice”; the SEC refers to Chen as Binance’s “Again Workplace Supervisor” in its grievance. In emails seen by Forbes introducing Chen to an out of doors get together, Chen was launched merely as a “VP” at Binance. A former Binance govt who handled Chen on cellphone calls informed Forbes they didn’t suppose she had an official title, however that her function was within the “finance division.”
Zhao himself has additionally tried to downplay her function: within the weblog publish from final 12 months, he stated Chen was chargeable for the “admin and clearing group.” However regardless of Zhao’s claims that she was primarily a authorized consultant whereas Binance was nonetheless primarily based in Shanghai, Chen’s central function in Zhao’s company entities prolonged far past China. After a Chinese language authorities crackdown on crypto exchanges compelled Binance to discover a new dwelling, Zhao established two corporations in Malta in 2018, putting in Chen as a director and sole authorized consultant at each companies the next 12 months, per Malta’s enterprise registry.
“Guangying needed to depart her household, her dwelling, and her buddies behind when most of us left China in 2017,” Zhao wrote final 12 months. “It was an incredible sacrifice and she or he is likely one of the only a few individuals who will ever actually perceive the impression that this has had on all of us.”
As for her present whereabouts, Zhao acknowledged within the 2022 weblog publish that Chen is a “passport holder in a European nation, the place she lives quietly together with her household.”
However present filings reviewed by Forbes within the Maltese and Singaporean enterprise registries seem to contradict that. Based on the Malta registry, Chen up to date the filings final June to register a brand new Chinese language passport. China doesn’t permit twin citizenship, and the filings present that she resides in Singapore. That seems to contradict Zhao’s assertion that Chen “lives quietly” in a “European nation.” Her LinkedIn says she’s primarily based within the United Arab Emirates, which Zhao moved to from Singapore in 2022.
Stated a former Binance govt: “She moved wherever [Zhao] went.”
Binance’s transfer to Malta failed when the nation’s monetary companies regulator introduced that the corporate was unauthorized to function in crypto in February 2020. As Binance expanded to new markets, Chen was there, appearing as a director and checking account signatory for subsidiaries in at the least 15 international locations starting from Canada to Kazakhstan, in accordance with courtroom paperwork and company filings.
In 2019, when Binance launched a separate U.S. trade as a part of a plan to persuade regulators that U.S. buyer information and funds had been managed and saved by a U.S. group, Chen was put in as an officer and checking account signatory on the U.S. corporations that ran the American enterprise. An end-of-year steadiness sheet for Binance.US in 2019, cited within the SEC filings, reveals Chen as the one signatory for all 9 of the corporate’s financial institution accounts on the time.
To bolster the native operation, Zhao used a brand new firm primarily based in Switzerland and led by Chen—as a director and financial institution signatory, in accordance with SEC filings and company data—to conduct what the SEC would later allege was widespread fraud on the U.S. platform. The corporate, Sigma Chain AG, was arrange as a so-called market maker, utilizing “income generated from the variations of bid and ask value,” backstopped by “funds from [Zhao’s] private account,” in accordance with an onboarding doc for Binance.US cited within the SEC filings.
However in contrast to typical market makers that function unbiased excessive quantity merchants on exchanges, Sigma Chain was allegedly used to artificially drum up buying and selling volumes on Binance.US utilizing a course of often known as “wash buying and selling”—sending crypto property backwards and forwards to create the looks of buyer exercise—in accordance with the SEC grievance.
On the day Binance.US launched in September 2019, Sigma Chain was conducting wash trades, creating the impression that the trade was bustling, per the SEC. In the summertime of 2021, when Binance’s U.S. arm was in talks to boost $200 million from buyers like Basis Capital and Circle Ventures—a deal that finally closed in March 2022—the SEC alleges that Sigma Chain accounts had been making spoof trades on 51 of the 58 cryptocurrencies accessible on the platform. Then, within the first half of 2022, as Binance.US listed dozens of latest crypto property, Sigma Chain allegedly performed wash buying and selling in 48 of the 51 newly listed property, in accordance with the SEC. In a submitting responding to the SEC’s grievance, Binance’s attorneys stated that “the allegedly manipulative buying and selling recognized by the SEC was totally acceptable and, in any occasion, was not materials.”
But inside the corporate, Sigma Chain’s exercise was elevating eyebrows amongst Binance.US staff. Catherine Coley, the previous CEO of Binance’s U.S. arm, had raised considerations in 2019, stating in a message to Binance’s then-CFO Wei Zhou that having Chen as a signatory for financial institution accounts could be a “pink flag for regulators and open [Binance] to U.S. scrutiny,” per SEC paperwork. When a gross sales director informed the Binance.US CEO and staff in January 2021 that 20 accounts belonged to Sigma Chain, an worker responded “whoa.”
Alongside the best way, the traces between Binance subsidiaries and entities managed by Zhao and Chen started to blur. Entities owned by Zhao and managed by the pair had been used to commingle roughly $11 billion in buyer deposits with Binance’s financial institution accounts, in accordance with the SEC. Past wash buying and selling, Sigma Chain was used to purchase an $11 million yacht and to pay $32 million to Chen personally.
Chen was additionally a financial institution signatory to a number of transactions that fueled Zhao’s opulent way of life, regardless of his espousal of removing materials luxuries and conventional banking; “no home, no automobile, no boat, no fiat cash,” he tweeted in 2020. The SEC paperwork present that one other firm owned by Zhao, British Virgin Islands-based Binance Capital Administration Co. Ltd., spent $55 million on a jet and distributed $62.5 million to one in all his private financial institution accounts. That agency and two different Binance entities managed by the pair directed one other $178 million to 2 Singapore corporations managed by Zhao and Chen.
However working so carefully with Zhao hasn’t all the time been advantageous for Chen. In his weblog publish final 12 months, Zhao expressed remorse for asking Chen to be his authorized consultant again in 2015 as a result of she’d been subjected to a lot scrutiny. “She and her household have been focused and harassed by the media and on-line trolls,” he wrote. “Had I recognized how a lot of a adverse impression this could have on her life, I by no means would have requested her to do what appeared like such an innocuous step on the time.”