Richard Teng (Binance): “The crypto industry has changed drastically, but users still 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 greatest exponent of this change is that the scandals of companies in the sector no longer affect the price of bitcoin, which begins the year above $40,000, a level that it has not reached in the last 20 months. The complaints by US regulators against Binance, the world's most used platform for buying and selling digital assets, and the departure in November of its founder and CEO, Changpeng Zhao, barely shook the market.

“The industry has changed drastically, but users continue to trust us,” he tells Five days Richard Teng (Singapore, 53 years old), the new CEO of Binance. The person in charge of taking the reins of this giant, which has 167 million registered users across almost 50 countries, has the difficult task of balancing between highlighting the company's achievements in its short (but controversial) life of six years and turn the page on the turbulence and scandals to prepare the firm for what it hopes will be an accelerated adoption of cryptocurrencies in a regulated environment.

The controversy is not minor. On November 21, the company pleaded guilty to ignoring anti-money laundering regulations while providing services to its US clients. The firm agreed to pay more than 3.8 billion euros in fines and agreed to appoint a supervisor for the company's activities, while Zhao left the company he founded. The firm still faces an individual lawsuit from the North American Securities and Exchange Commission (SEC).

“We made mistakes. When we started in 2017, compliance was insufficient in some areas. We recognize these facts as part of the resolution and we move forward from that,” he says in conversation with this newspaper, in his only interview with a Spanish media. To differentiate it from other famous cases, especially that of FTX founder Sam Bankman-Fried, Teng insists that US regulators did not find any cases of fraud in the use of his clients' assets. Furthermore, he points out that users were always able to withdraw all their investments from the platform, unlike what happened with other cases such as the moon stablecoin.

We made mistakes. When we started in 2017, regulatory oversight was insufficient in some areas. We recognize these facts as part of the resolution and move forward from there

Richard Teng, CEO of Binace

Teng also faces the challenge of abandoning the messianic style that prevailed among the great protagonists of the sector until now. “CZ has been a very inspirational founder who has done many things for the industry,” he explains, although he hesitates for a moment about which tense to use. The profiles of both managers could not be more different. While the previous CEO moved like a great celebrity, a guru on par with other icons in the sector, Teng prefers humility and a speech clearly modulated by his communications team. With constant references to the staff that accompanies him in the task of maintaining the firm and to his experience in the regulatory sector, he worked in Abu Dhabi and Singapore before joining Binance in 2021, he makes it clear that the narrative will not be the same. 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 investment. “We need adoption by institutions. “This guarantees us new research, more investments, fresh products and greater liquidity,” highlights Teng, while also seeing 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, excites the manager, who believes that it will be “pure benefit for the industry.” The United Kingdom banned Binance from operating in the country in 2021, considering that it was carrying out activities without the corresponding regulatory permission.

The traditional, defiant discourse is maintained only in relation to the traditional press, which it targets for its coverage of money laundering: “The media choose to report on a single aspect.” This, according to the leader of Binance, forgets that “the blockchain It is a traceable technology” and that the company receives “more than 50,000 requests for cooperation from the authorities each year.” Its central 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 its survival was at stake. “In the first days after the news, there was a net outflow of funds from the Binance platform. However, that has changed: we have seen very strong net inflows so far and our user base continues to grow,” he maintains.

We've seen very strong net inflows so far and our user base continues to grow

Richard Teng, CEO of Binance

This is not just a peculiarity of Binance, the data points out. Since October, the sector has experienced a streak of 11 consecutive weeks of money 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 monthly since September, according to information from consulting firm CCData, although its market share has fallen 20 percentage points since the beginning of the year.

Teng repeats like a mantra that “users trust us” despite the difficulties experienced. Behind the reasons for this, it stands out that the exchange has always been consistent with its commitment to users and that its clients have always been able to withdraw their savings without problems. And it separates itself from the fall of other major players in the sector, whom it avoids naming, by highlighting that its corporate structure “remains debt-free,” while at the same time it registers profits and expenses remain low.

One of the first controversies for Teng's leadership has been his refusal to reveal the location of Binance's global headquarters, and maintains Zhao's policy in this regard. In Spain, the local subsidiary, which operated under the name Moon Tech Spain, is registered in the heart of the Salamanca neighborhood, in a building shared by homes and a business premises. coworking. “We are a global company with global operations. In Europe, our regional headquarters is in France and, when we have something to announce, we will do so,” he simply states.

Precisely the character and global ambition of the company 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. “The disparity in regulations makes it difficult for companies like ours. The norms conflict with each other,” he comments. The expectation, he says, is that “over time the sector will move towards harmonization of international standards,” to facilitate the operation of global firms.

In Spain, the company has been registered since last year as a service provider with the Bank of Spain. However, this does not imply that the Bank of Spain has approved or supervises its operations, which reach customer deposits worth 182.7 million euros; o
nly that the authority verifies that the requirements for the prevention of money laundering and terrorist financing are met.

Regarding the rest of Europe, although it avoids directly mentioning data from Spain, it celebrates the approval of the new European regulation for cryptocurrencies (MiCA), which will allow it to avoid the permission of each of the Twenty-Seven and make use of a single 'community passport'. This would allow it to avoid new problems, such as those it had in the middle of the year that forced it to suspend its operations in the Netherlands and Cyprus and withdraw its license application in Germany and Austria.

The community standard will not come into force until the end of 2025, but the firm seeks to be prepared. Teng insists that in the last two years the platform has invested almost $400 million in its compliance with the aim of being above any other actor. However, other voices in the sector warn that greater spending does not equal 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. The recipe to ensure the future of Binance is, the manager assures without a doubt, by “enlarging the cake.” “We have focused on building a vibrant ecosystem and increasing cryptocurrency adoption, going from just 5% adoption to 20%.” And here he recovers the centrality of the user, which he says was the key to the company's strength.

The question remains whether Binance will be able to navigate an industry in full transformation without falling into nostalgia. With Zhao away from the company that he founded and awaiting the ruling of the American Justice, the firm must invent a new manual, away from major events and controversies at the pace of Twitter. “I'm very optimistic,” Teng concludes the conversation. The preponderance of exchange They also give him another responsibility: it is also up to him to establish a new business leader model for the crypto world.

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