Bloomberg Interview with He Yi: My relationship with CZ is that of a mentor, friend, and spouse.

Bloomberg Interview with He Yi: My relationship with CZ is that of a mentor, friend, and partner.

Title: “Crypto’s Most Powerful Woman Speaks Out as Crisis Rocks Binance” by Bloomberg Crypto

Translation by Leo & czgsws, BlockBeats

For the past six years, a female executive at Binance has successfully avoided global attention, even as governments around the world crack down on cryptocurrency. That executive is He Yi.

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As a heavyweight co-founder trapped in the crypto empire, He Yi is one of the most powerful players in this $1.2 trillion industry. As regulatory pressures deepen, Crypto’s largest trading platform, Binance, is also facing a survival crisis and He Yi is set to suffer significant losses.

After successfully marketing Binance through media platforms in the early days, former Chinese TV host He Yi played a key role in Binance’s rapid rise. Now, she faces the most dangerous moment in the company’s history, as the exchange dominates the token trading, venture capital, and even digital art markets. The US SEC has charged Binance with illegal operations, trading violations, and non-compliance in a civil lawsuit, while Binance is also facing scrutiny from countries ranging from France to Australia.

As the market dominated by the company faces regulatory pressure, executives also face billions of dollars in risk. According to the Bloomberg Billionaires Index, Binance CEO CZ is worth around $29 billion, and He Yi, as an early shareholder, also has a huge fortune. (Her shareholding size is not disclosed.) The two share their wealth in many ways: they have been business and life partners and have raised children together.

In a series of interviews with Bloomberg, including one in Dubai before the SEC filed its new lawsuit, He Yi tried to convey two key messages. First, the differences between Binance and regulatory agencies are not as great as they seem. Second, the platform is far from the failure that critics claim it to be.

Last month, she said at the five-star Address Fountain Views hotel in Dubai: “If they really took the time to understand our industry, they would find that if Binance is not compliant, then almost no global trading platform or offshore company is.”

Despite Binance’s claim of having no official headquarters, which theoretically increases the difficulty of being sued and regulated, CZ and He Yi have already rooted themselves in the company’s second home – the Gulf City State (Dubai). She likened her relationship with CZ to that of college roommates. At first glance, this combination and the governance issues it raises are reminiscent of the relationship between SBF and Caroline during FTX’s heyday. However, He Yi refused to be compared.

The US regulator’s charges mark the end of the era when crypto was “free to do whatever it wanted”. He Yi’s message on WhatsApp expressed a more reassuring tone.

“We respect the regulators’ attitudes, whether they are in favor of or against the development of crypto. I understand that, for the protection of investors, the overall intention of regulation is good.”

It should be noted that Binance is not the only company facing regulatory challenges. The US SEC has also charged mainstream crypto platforms such as Coinbase Global Inc. and Kraken with violating securities rules. However, the scope and severity of the charges against Binance are more concerning. US officials said the company lacks adequate anti-money laundering controls, trading volumes have surged, and customer asset disposal has been mishandled. According to Bloomberg News, it is also under investigation by the Justice Department, and its US platform is being cut off from the banking system, while similar banking-related issues are affecting other areas of the company.

US agencies’ investigations are not always directed at individuals or companies, and the Justice Department has not announced any cases against CZ or other Binance executives. US regulators have also not accused He Yi of violating any rules.

A Binance spokesperson mentioned the company’s response to the SEC complaint earlier this month to Bloomberg News. Binance called the regulatory action “disappointing” and said it would defend itself, claiming that customer funds on its platform have never been at risk.

Behind the scenes, He Yi and Binance have a huge influence, with the trading platform accounting for about half of all crypto trading volume and about 8,000 employees worldwide. He Yi also oversees Binance Labs, a venture capital fund worth billions of dollars that has supported more than 200 projects, including decentralized file-sharing platform BitTorrent and blockchain gaming giant Axie Infinity. He Yi has also been praised for her work in promoting the development of the BNB Chain, whose native token was recently deemed an unregistered security by the US SEC, and for assisting regulatory agency clients and acquisition businesses such as CoinMarketCap.

During an interview in Dubai, He Yi only brought one bodyguard with her. She stated that her limited English proficiency was one of the main reasons she never became an ambassador for Binance. She acknowledged this as one of her weaknesses in an interview with Bloomberg. However, company executives have tried to downplay ties to China as the country implements a ban on crypto trading.

“When I interact with Western journalists or give public speeches, people may think we are a Chinese company, right?” The most powerful woman in the crypto industry spoke out when the crisis hit.

Evidence collected by the US SEC in the case against Binance can reveal He Yi’s early involvement with Binance. In a translation record of an audio file from 2019 released on June 6, spokesman CZ mentioned her name, which was part of the decision-making process on how Binance circumvented restrictions to allow US users to enter its larger Binance.com platform.

In the eyes of critics, Binance’s operations still resemble those of a startup, with governance and ownership structures shrouded in shadow, and its commitment to millions of users can be summed up as “you can trust us.” However, in He Yi’s view, the transparency provided by Binance is higher than that claimed by critics, and it has been working with US regulators all along, although US authorities have objected to this.

He Yi also acknowledged that “global regulatory trends are inevitable” for the crypto industry.

He Yi did not respond to the SEC’s allegations that market makers associated with CZ traded on Binance, using so-called wash trading to increase trading volume, and that customer funds were commingled and freely transferred in and out of various accounts. Meanwhile, she emphasized that unlike the charges against FTX, Binance did not misappropriate user funds for its own purposes and did not use its native token BNB as collateral for loans.

Speculation about the post-CZ era is increasing. Although CZ has not indicated that he is willing to give up power soon, it now seems more apparent. When asked if she had thought about Binance without her and CZ, He Yi said they both had backup executives in training but refused to reveal their names for the time being. “I think we’ll be fine. We’re not a single point of failure.”

Unlike Wall Street, which operates through a daisy chain of intermediaries, centralized cryptocurrency trading platforms handle all transactions from matching orders to custodying customer assets, leaving investors exposed to potential conflicts of interest and counterparty risks. As scrutiny of cryptocurrency businesses intensifies, Binance is trying to reshape its image by beefing up compliance personnel. But signs suggest its loyal fan base is beginning to fracture after US charges. Binance’s trading share in derivatives and spot markets has fallen from its peak earlier this year, according to industry analytics firm CCData.

Austin Campbell, a part-time professor at Columbia Business School who previously worked at BlockFi, said: “Binance is in a disadvantaged position, and Western regulators are pursuing this business model – either having a completely independent custodian or stricter rules around custody, user fund handling, and duty bundling.”

In 2014, when He Yi first entered the cryptocurrency field on the OKCoin trading platform, China was at its center. At the time, she was already known as a travel show host and served as a judge on reality shows to promote the platform. He recalled that same year she hired CZ as CTO because of his experience in trading systems engineering and his work experience, including at Bloomberg LP, the parent company of Bloomberg News.

In 2017, when CZ invited her to be a Binance adviser, He had already left the virtual currency industry to become an executive at a live-streaming company. That summer, she helped rewrite part of the ICO white paper for Binance and later agreed to join Binance. Unlike most co-founders, technically she did not belong to the company in its early days. But people familiar with her early background widely believe her fame in China’s cryptocurrency community was crucial to Binance’s rapid success at the time, when Binance was just a newcomer compared with trading platforms such as OKCoin and Huobi.

Six years have passed, and the cryptocurrency industry has been punished for becoming a hotbed of so-called illegal activities, while Binance’s enthusiasm for market share has become the target of the platform. With its trading promotions, in some ways, it’s even more extreme than Robinhood. For example, by mid-2021, users could withdraw up to two bitcoins without providing any identification. It also listed some tokens that have been proven useless, including last year’s crashed TerraUSD algorithmic stablecoin. For cryptocurrency critics, Binance has earned profits from retail gamblers who hardly understand them.

It is a well-known fact among insiders in the cryptocurrency community that He Yi and CZ have a child together. How does she describe their relationship? He Yi has some objections to this.

“There is a saying in the entertainment industry called CP, right?” she says this is Chinese net slang and refers to fans hoping that two people, whether on screen or in real life, will develop a romantic relationship.

He Yi also referred to Zhao as a comrade-in-arms and called him a college roommate. She said their contact began after she joined Binance. He Yi compared this to Amazon, where Jeff Bezos’ ex-wife Mackenzie Scott was a contributor at the company’s inception, but He Yi also admitted that this was not a “perfect” example. Among other things, Scott did not participate in Amazon’s billion-dollar business as deeply as He Yi.

As for similarities with SBF and Caroline, He Yi emphasized the differences.

“There is a significant difference here: Caroline is an employee, and I am a partner. Co-founders need more than just a dating relationship. Co-founder relationships are about comradeship, while dating relationships are about chemical reactions. The former is based on shared beliefs and goes beyond gender, while the latter is based on physical attraction and selfish desires.”

He Yi also pointed out that her position as a cryptocurrency pioneer preceded CZ’s. “Even without considering personal relationships, I am the one who brought CZ into cryptocurrency trading,” she added. “CZ brought me to Binance based on the achievements I had already made,” He Yi said.

However, this situation will raise danger signals for regulators concerned about blurred boundaries and centralized power. He Yi is responsible for Binance’s cryptocurrency investment and listing departments. Binance board member Vishal Sacheendran said that the Binance token listing team led by He Yi was very mysterious, to the point that few insiders knew who its members were. The company said this was part of an effort to reduce potential conflicts of interest. However, this business model sounds particularly opaque after the FTX collapse, partly due to the complex relationship between its trading platform business and trading department Alameda Research.

It should be noted that large cryptocurrency trading platforms typically combine a range of financial services that would never exist under the same roof in traditional finance. However, the diversification of investments, as well as the opacity of management, suggests a feeling of strict control within Binance’s core. According to records, He Yi played down concerns about conflicts of interest. “Many of the projects we invest in are actually not listed. There are different leaders and different teams, and these two teams are completely independent.”

In any case, US regulators appear determined to crack down on this cryptocurrency giant, announcing that much of the industry is illegal. Some concessions may have to be made. It is not clear what specific concessions He Yi and CZ are willing to offer now, although she admits that the era of carefree cryptocurrency is over.

He Yi said, “If you can’t beat them, you have to surrender.”

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