Binance co-founder could redo his crypto trade

Binance co-founder Yi He isn’t as well-known as the crypto giant’s colorful and controversial CEO, Changpeng “CZ” Zhao.

That could soon change. The 35-year-old executive is taking on a new, more high-profile role at the world’s largest crypto exchange as head of Binance Labs, the company’s venture capital arm. With $7.5 billion in assets to oversee, this instantly makes her one of the strongest venture capitalists in crypto.

This is her first role managing the crypto powerhouse’s investment strategy after serving as Binance’s Chief Marketing Officer, a position she still holds. But she has the experience of a decade-long career in crypto, including five years with Binance, which he co-founded in 2017.

“I’m one of the most OG in the Binance group,” she told Protocol.

Crypto is new enough that 10 years can make you old-school. But Binance’s track record of controversial, if not questionable, investments makes its new role all the more challenging.

Just recently, Binance was embroiled in an M&A controversy WazirXa crypto exchange it said it acquired in 2019. Amid reports that the Indian government was investigating the exchange for alleged money laundering, CZ caused a stir on Twitter when he said the deal was never done. Founder of WazirX Nischal Shetty disputed this assertion.

Binance has also drawn attention for investing in Terraform Labs, whose UST stablecoin and luna coin failed helped drive the crypto market down this year. CZ said the $1.6 billion loss on its Terraform-related holdings was almost entirely on paper, as it obtained the tokens as part of a $3 million seed investment.

Binance’s investments outside of crypto have also raised eyebrows and caused head-scratching. The company is committed to supporting Elon Musk’s Troubled Twitter Bidcommitting $500 million to the proposed takeover.

In February, Binance announced a $200 million strategic investment in Forbes. The publication put CZ on the cover in 2018, shortly after the company launched; Binance then sued Forbes for defamation over a different story regarding its approach to regulation. (The suit was discontinued last year.)

Explaining the investment, CZ said “the media is a critical component” to educating the public about blockchain and Web3 technologies. But recently he cryptically said that the project Forbes investment was “changing” after a planned SPAC deal collapsed in June.

Forbes is a “fantastic company,” it said, even as it addressed the perception that Binance might be trying to buy media influence. “Even with the investment the editorial staff would be completely independent,” she stressed.

But she acknowledged that Binance struggled with its public perception. The company has been accused of letting criminals use his services and grappling with regulatory challenges in major markets, including the United States

The company was essentially banned in CZ and its native China, which blocked the Binance.com site the year it launched in 2017. Last year, Binance banned transactions involving the Chinese yuan after China said illegal crypto transactions. That seems like a painful irony to He, who came up with the company’s Chinese name, which translates to “safe coins.”

Binance, which now has over 6,000 employees, operates from regional offices in Dubai, where it now spends most of its time, and in France; she frequently travels to Europe.

She grew up in a rural area of ​​Sichuan province in western China, where her parents worked as teachers. “I come from a very small village and a very poor family,” she says.

Her father died when she was young, which she says brought new challenges for her family, but “ [her] stronger.” Her mother wanted her to become a teacher too, but he pursued other paths.

His first job was to promote a new soft drink by standing outside a supermarket and offering consumers a free taste. It was hard work and “all the talking and peddling led to a hoarse voice,” she said in a biographical summary prepared by the company.

She also worked as an art school assistant and travel TV host before moving into marketing, a career that eventually led her to tech and crypto.

She met CZ at a crypto meet while working as a VP at a mobile video technology company. CZ invited her to join him in launching Binance in 2017.

She accepted, even though it was a difficult launch. Binance’s native cryptocurrency BNB crashed 50% on day one, though it recovered quickly, she said.

Binance’s rise as a major player in the crypto industry has been meteoric. The media spotlight was directed primarily at CZ, while he remained mostly in the background. Ray Wang, president of Constellation Research, said she has been instrumental as an executive who “understands all angles” of the crypto ecosystem.

Wang credits He with making “smart moves in building alliances in the crypto space with key winners like FTX and Polygon.”

Last year, Binance said it had integrated the Polygon blockchain network. The company announced in 2019 that he had made a strategic investment in the new FTX. This relationship ended after FTX, which became a major rival of Binance, bought back shares of Binance in the business last year.

This is a critical time for He as the new leader of Binance Labs.

Binance remains the largest crypto exchange, with a daily trading volume of over $16 billion. Coinbase is far behind with a daily trading volume of around $2.3 billion, according to CoinMarketCap. (Binance bought the market data site in 2020, another sign of its acquisitive reach.)

Binance Labs, which covers around 200 wallet projects, announced in June that it had closed a $500 million investment fund for blockchain and Web3 technologies. Announcing He’s new role, CZ said it was “the perfect time” for her and the company. “This market presents an unprecedented opportunity to identify those projects with the tenacity to thrive in challenging market conditions,” CZ said.

Melody Brue, analyst at Moor Insights & Strategy, said he was known to be “strategic, but aggressive”. This is also how Wang describes her, noting how he has become a major female figure in “a very male-dominated space”.

“Many executives underestimated his fierceness and determination to win,” Wang said. “She’s learned to cut corners, and people appreciate the continuity of her approach.” Wang said she can be “a difficult person to work for”, according to her friends who work for her.

“But you work hard and you also get rewarded,” he said. “She has very high standards. She is ultimately tough but fair.

His aggressiveness could pay off in a key area for Binance: dealing with regulators. Wang said she was “not afraid to jump into the fire”.

“Instead of avoiding regulators, she went ahead and hired them,” he said. “She knows crypto winners will be regulated.”

This is a question that is at the heart of his concerns for He in his new role. “A lot of people think, ‘OK, it’s a bear market. It’s an accident. It’s time to buy,'” she said. But he said she wanted to pick her targets well, pursuing businesses based on Binance’s current needs.

With regulation being a major concern, it makes sense to buy a company with the necessary licenses: “It’s valuable,” she said.

“If they don’t have a license, if they don’t have a user base and [they] lose money every month, and you buy it, that’s [like buying] a bigger hole, and you just keep losing money,” she said.

Brue said the downturn offers many opportunities “to choose from the rubble.” The Binance co-founder “has been through bear markets before and, like many crypto VCs, is thinking long term,” Brue added.

Patience will be key, he said: “It takes time to grow. We are far from having succeeded. Forward thinking, fast execution and risk awareness will get us there eventually.

Update: An earlier version of this story misrepresented Coinbase’s daily trading volume.

Update: This story was updated on August 19 to indicate that Binance Lab’s investment fund was $500 million, not $500.