Written by: Gyro Finance
A photo of Master Bao brings back memories of the past.
Just recently, Bao Erye suddenly posted a photo of Zhao Dong standing in Crypto Valley on social media. In the photo, Zhao Dong, wearing a white sports jacket, smiled brightly, and was full of hope for life. The post triggered a rare flurry of nostalgia on social media, with some even speculating that Zhao Dong's appearance in the United States was due to his release from prison. Although Bao Erye later denied the rumor, stating that the photo was from 2018, Zhao Dong's presence still caused a slight ripple in the calm waters of the crypto.
Why is the crypto showing so much concern for a crypto who has already been jailed? Zhao Dong may be an ordinary person, but his story is worth hearing.
Zhao Dong was born in rural Shanxi in 1982 and graduated from Dalian Jiaotong University. Unlike other hardworking academics, Zhao Dong even failed a course and was demoted for two years in college. However, this opportunity allowed him to learn software technology and embark on the path of a tech geek. Riding the internet boom, Zhao Dong and his university classmate Jin Li created Moji Weather, an internet weather forecast app. While most people may not be familiar with it today, by 2011, this tool-only app had over 10 million users, making it a leading tool in the category. There seemed to be a natural gap between tech geeks and business, and as the team continued to expand, conflicts arose, leading Zhao Dong to leave Moji Weather in 2012. Fortunately, however, he successfully earned his first pot of gold, rumored to be 7 million yuan.
After leaving Ink Weather, Zhao Dong remained active. He soon joined Garage Coffee and launched his second venture as CTO. 2013 coincided with Bitcoin's first major breakthrough, and the wonder of Garage Coffee was that it was home to many of the biggest names in the crypto , including Li Lin, Star Xu, CZ , Chang Qia, and Bao Erye. From that moment on, Zhao Dong's life in the crypto began to take shape. Through his friend, Wu Gang, CEO of Bixin, he purchased his first Bitcoin for 400 yuan, officially entering the digital currency world. Even before purchasing, Zhao Dong, a technical background, was deeply captivated by the blockchain's "code is law" philosophy. After trying his hand at buying coins, he was hooked.
His first investment was 10,000 RMB, which he used to buy 10 Bitcoins. Within two weeks, the price skyrocketed, and seeing the profit, Zhao Dong added another 500,000 RMB, and then continued to add to his investment until it reached 1,000,000 RMB. As Bitcoin's price continued to soar, Zhao Dong's wealth grew rapidly. By the end of 2013, Zhao Dong's Bitcoin holdings had exceeded 15,000. At the then market price of 8,000 RMB, his net worth exceeded 100 million RMB. At the current price of 110,000 RMB, the total value would reach 1.2 billion USD. With his established connections and the real money he had earned, Zhao Dong's understanding of the crypto expanded beyond arbitrage and spot trading. He began to transform from an investor into a deep builder, not only playing with futures contracts but also dabbling in mining.
But market education is equal to everyone. In 2014, the Mentougou incident caused Bitcoin to fall from its heyday. The price of Bitcoin suddenly plummeted from more than $600 to $102. Zhao Dong, who continued to increase his leverage, suffered a heavy blow. According to his disclosure in the WeChat group, on February 10, 2014, his position was liquidated in one day and he lost more than 9,000 Bitcoins, which was equivalent to $8 million at the time. And this was just the beginning. The losses of the mining farm came as expected. In 2014 alone, Zhao Dong lost more than 150 million yuan. At the most difficult time, he only had 100,000 yuan in cash and was burdened with 60 million yuan in debt.
It was precisely because of this that Zhao Dong, desperate for cash, discovered the OTC (Over-the-Counter) market opportunity. At the time, OTC was a crucial need for everyone in the crypto, and successfully withdrawing funds from trading was a common challenge for everyone in the market. Leveraging his extensive network and resources, Zhao Dong focused on matchmaking transactions and successfully built a vast OTC network. Zhao Dong profited from the transaction fees and spread between buyers and sellers.
According to Zhao Dong, "I relied on the credit I'd built up, gradually doing over-the-counter trading. At my worst, each trade was less than 3,000 RMB, with a profit of 60 RMB. At my best, each trade was worth nearly $100 million." In August 2015, Zhao Dong posted on Weibo that he had achieved a trading volume of 30 million RMB in a single month, with a 2% transaction fee. With such profits, Zhao Dong not only paid off his debts through OTC trading in less than two years, but also achieved a resurgence, riding the wave of ICOs to establish DFund, a blockchain-focused fund. Zhao Dong is also a Bitcoin evangelist. In a widely circulated image, his words, "If you don't buy Bitcoin this year, you'll find it worth $100,000 later," have come true. Interestingly, while DFund claims to have invested in many high-profile projects, many investors on Weibo have reported that they have not received any dividends.
In 2016, Bitfinex was hacked, with nearly 120,000 bitcoins stolen, totaling over $65 million. As the world's largest Bitcoin/USD trading platform, this theft caused a stir in the market. Zhao Dong was one of the victims. As compensation, he received BFX, a Bitfinex-issued token. This marked the beginning of Zhao Dong's relationship with Bitfinex.
Based on this, Zhao Dong, following Bitfinex's connections, established a connection with USDT issuer Tether and further expanded into the lending business, becoming a prominent Chinese advocate for USDT. Against this backdrop, in 2019, Zhao Dong founded Renrenbit, a P2P lending and wallet startup, further expanding his business. For a time, Zhao Dong was a prominent figure in the crypto, a scene that was quite lively.
As the saying goes, "No flower blooms forever, and no man is happy forever." Zhao Dong, whose career was thriving, soon ran into trouble. On July 2, 2020, market sources reported that Zhao Dong had been taken into police custody. This news was later confirmed. The charges against him kept changing. Initially, Zhao Dong was arrested for illegal business operations, but was subsequently sentenced to two years for money laundering and aiding and abetting fraud. Later, during the trial at the Hangzhou Xihu District People's Court, it was discovered that he was also involved in illegal foreign exchange trading.
According to the "Typical Cases of Punishing Foreign Exchange-Related Illegal and Criminal Activities" published by the Supreme People's Procuratorate on its official WeChat account on December 27, 2023, Zhao Dong engaged in two major offenses that crossed legal red lines. First, he engaged in illegal payment and settlement activities. Knowing that the source of funds was illegal, he used his personal bank account to collect RMB and exchanged it for virtual currency from You, generating a profit of over 24.29 million RMB. Zhao Dong profited 35,000 RMB. Second, he engaged in illegal foreign exchange trading. He provided foreign currency exchange and payment services to others, exchanging over 43.85 million RMB between March and April 2019, generating a profit of over 870,000 RMB.
While the profit wasn't significant compared to his net worth, the incident was truly significant. Ultimately, Zhao Dong was sentenced to seven years in prison, transforming from a high-ranking OTC tycoon into a prisoner. Looking back on Zhao Dong's journey, starting with just one bitcoin, doubling his net worth, then facing bankruptcy, a comeback through OTC trading, and ultimately, imprisonment, his rollercoaster ride is legendary, and his personal story has become a microcosm of the industry's development.
That's why, after Bao Erye posted the photo a few days ago, people speculated whether Zhao Dong had been released from prison, which triggered widespread discussion. Of course, after Bao Erye denied the rumor, some insiders also spoke out, indicating that Zhao Dong has not been released from prison. According to information disclosed by the Western Suburbs Prison in Zhejiang Province, Zhao Dong applied for parole last month, but it has not been successfully accepted.
On the other hand, despite suffering in prison, Zhao Dong will still be a tycoon holding immense wealth upon his release. This is because he holds early shares in Tether, and the Bitcoin he passively locked up is now worth a fortune. Therefore, Zhao Dong will still be a prominent figure in the crypto after his release.
2013 marked the collective rise of the crypto OGs, but observing their current developments makes one sigh with regret. Friedcat has disappeared, Hui Yi committed suicide, Li Xiaolai made a stunning pivot after earning enough money, leaving behind the words "Bitcoin is a scam," and Bao Erye remains active in the front lines, but has embarked on a life of luxury, even buying a leek farm. Xue Manzi built a "Manzi Trail" but still can't resist launching projects to profit from the leeks.
Interestingly, nearly all the exchange bosses remain active on the front lines. Huobi, once founded by Li Lin, has changed hands, but has returned to Hong Kong as New Fire Technology. Justin Sun, Star Xu, and CZ have all left mainland China, having previously received significant legal action, but are now pillars of the crypto. Justin Sun is focused on marketing, while Tron's popularity remains undimmed. Star Xu, with the intention of donating to the nation at any time, is about to list OKX. Binance has become the world's largest exchange and has even established ties with Abu Dhabi. Although CZ, who served four months in prison, is no longer CEO of Binance, he still maintains a firm grip on the company.
Today, with the deregulation of regions like the United States and Hong Kong, the crypto has transformed. As SEC Chairman Paul S. Atkins recently stated at the inaugural OECD Roundtable on Global Financial Markets, "We must acknowledge that the era of cryptocurrency has arrived." A new era for cryptocurrencies is indeed dawning. However, even with the support of the US President, the crypto is no longer condemned by the public, yet it is forced to conform to the rules of traditional finance and experience the pain of acclimatization. The once wild west is gone, and the days of digging for gold in the gray area are over. Traditional institutions have taken center stage in the crypto. Looking at the original OGs, those who have managed to survive, thrive, and even become free agents amidst the vicissitudes of life are more like the lucky ones than the elite.
In April of this year, in Hong Kong, these former OGs gathered again, drinking and laughing their way through their grudges. Then again, wealth is valuable, but freedom is even more valuable. Enjoying both, the OGs seemed to have little other expression on their faces except for a smile.
