For the past six years, one of Binance's top female executives has managed to stay out of the global spotlight, even as governments everywhere intensify their crackdown on cryptocurrencies — He Yi.
A heavyweight co-founder trapped in a crypto empire, He Yi is one of the most powerful players in the $1.2 trillion industry. With the deepening of regulatory shocks, Binance, Crypto's largest trading platform, is also facing an existential crisis, and He Yiyi will suffer great losses.
After successfully marketing Binance through media platforms in the early days, former Chinese TV host He played a key role in Binance's meteoric rise. Now, she faces the most perilous moment in the history of the company, which dominates token trading, venture capital, and even digital art. The US SEC regulator has accused Binance of operating illegally, violating trading rules and not complying with regulations in a civil lawsuit, while Binance is also facing scrutiny from countries ranging from France to Australia.
With the market the company dominates now facing regulatory pressure, executives are also putting billions of dollars at risk. According to the "Bloomberg Billionaires Index", Binance CEO CZ is worth about US$29 billion, and He Yi also has huge wealth as an early shareholder. (The size of her holdings was not disclosed.) The pair's wealth is shared in several ways: They have been partners in business and life, and have children together.
In a series of interviews with Bloomberg, including one in Dubai ahead of the SEC's new lawsuit, He tried to convey two key messages. First, the disagreement between Binance and regulators is not that great. Second, the platform is far from being as bad as critics make it out to be.
“If they really take the time to understand our industry, they’ll see that if Binance doesn’t play by the rules, other global exchanges or offshore Companies can say that almost none of them are compliant.”
Although Binance claims that it has no formal headquarters, it theoretically makes it more difficult to be sued and supervised. But CZ and He Yi have already put down roots in the company's adopted homeland, the Gulf city-state (Dubai). She likens her relationship with CZ to a college roommate. At first glance this combination and the governance issues it raises are easily reminiscent of the relationship between SBF and Caroline once in the heyday of FTX. But He Yi refused to compare it.
He Yi expressed a more conciliatory tone in a message conveyed on WhatsApp as the accusation by US regulators marks the end of the era of "do whatever you want" in encryption.
“We respect the attitude of the regulator, whether it is for or against the development of crypto, I understand that the overall intention of regulation is good in order to protect investors.”
To be clear, Binance is not the only company facing regulatory onslaughts head-on. The US SEC also accused mainstream encryption platforms such as Coinbase Global Inc. and Kraken of violating securities rules. However, the scope and seriousness of the allegations against Binance are of greater concern. U.S. officials said the firm lacked adequate money-laundering controls, saw a surge in transaction volume and mishandled client assets. It is also under investigation by the Justice Department, according to Bloomberg News, and while Binance’s U.S. platform is being cut off from the banking system, similar banking-related issues are hitting other areas of the company.
Investigations by U.S. agencies have not always targeted allegations against individuals or companies, and the DOJ has yet to announce any cases against, CZ, or other Binance executives. U.S. regulators have yet to charge He Yi with any violations.
A spokesperson for Binance referred Bloomberg News to the company's response to the SEC complaint earlier this month. Binance called the regulatory action "disappointing" and said it would defend itself, saying customer funds on its platform were never at risk.
Behind the scenes, He Yi and Binance have a huge presence, with the exchange accounting for about half of all crypto trading volume and Binance employing some 8,000 people worldwide. Yi He is also in charge of the multibillion-dollar venture capital fund Binance Labs, which has backed more than 200 projects, including decentralized file-sharing platform BitTorrent and blockchain gaming giant Axie Infinity. He Yi is also widely praised for promoting the development of BNB Chain. Its native Token was also recently identified as an unregistered security by the US SEC. She also helped regulators with client business and acquisitions such as CoinMarketCap.
When He Yi went to Dubai for an interview, he brought only one bodyguard. She said her limited English is also a big reason why she never became the face of Binance. She acknowledged in an interview with Bloomberg that this is a weakness of hers. However, the company’s executives have sought to downplay the connection to China, which is enforcing a ban on crypto transactions.
“When I interact with Western journalists or give public speeches, people may think we are a Chinese company, right?” When the crisis came, the most powerful woman in the crypto industry came forward.
In the evidence collected by the US SEC against the Binance case, He Yi's early participation in Binance can be found. Spokesperson CZ named her in a translated transcript of the 2019 audio file released on June 6 as part of a decision-making process on how Binance circumvented restrictions to allow US users onto its larger Binance.com platform .
In the eyes of its critics, Binance still operates like a startup, with its governance and ownership structures cast in the shadows, and its promise to millions of users really boils down to: you can trust us. In He Yi’s view, however, Binance offers more transparency than its critics claim and has been cooperating with U.S. regulators, which U.S. authorities have disputed.
He Yi also admitted that for the crypto industry, "global regulatory trends are inevitable."
He Yi did not respond to the US SEC's allegations that CZ-related market makers traded on Binance, the firms used so-called wash trading to increase trading volume, and that customer funds had been mixed and freely transferred in and out of various exchanges. account. At the same time, she emphasized that unlike the allegations against FTX, Binance did not misappropriate user funds for its own purposes, nor did it use its native Token BNB as collateral for loans.
There is growing speculation about the imminent arrival of the post-CZ era. While CZ has not indicated a willingness to relinquish power anytime soon, it now appears to be an increasingly likely possibility. When asked if he thought about Binance without her and CZ, He Yi said that they all have backup executives who are undergoing training, but declined to disclose their names for the time being. "I think we'll be fine. We're not a single point of failure."
Unlike Wall Street, where trades are conducted by a Daisy Chain of middlemen, centralized cryptocurrency trading platforms do everything from matching orders to hosting client assets, exposing investors to potential conflicts of interest and counterparty risk. As scrutiny of cryptocurrency businesses mounts, Binance is trying to reshape its image by beefing up its compliance staff. But there are signs that its loyal fanbase is starting to crack after the US allegations. According to data from industry analyst CCData, Binance’s trading share in Derivatives and spot markets has declined from its peak earlier this year.
Austin Campbell, an adjunct professor at Columbia Business School who previously worked on Paxos, said, “Binance is at a disadvantage, and Western regulators are pursuing this business model—either there is a completely independent custodian, or there are custodians, Stricter rules for handling of user funds and bundling of responsibilities.”
When He Yi first forayed into the cryptocurrency space with the OKCoin trading platform in 2014, China was at its center. By then she was already well-known as a travel show host and a judge on reality shows to promote the platform. That same year, He recalled, she hired CZ as chief technology officer because of his extensive experience in engineering trading systems, which included work at Bloomberg LP, the parent company of Bloomberg News.
In 2017, when CZ invited her to be a Binance consultant, He Yi had already left the virtual currency industry to become an executive of a live broadcasting company. That summer, she helped Binance rewrite part of the ICO's Whitepaper, and later agreed to join Binance. Unlike most of the co-founders, she wasn't technically part of Binance in its early days. But people familiar with her early background generally agree that her fame in the Chinese cryptocurrency community was crucial to the rapid success of Binance, which at the time was only a rising star compared with exchanges such as OKCoin and Huobi.
Six years on, the crypto industry has been punished for being a hotbed of so-called illicit activity , and Binance’s zeal for market share has become the platform’s target. With its deal promotions, it's even bigger than Robinhood in a way. For example, by mid-2021, users will be able to withdraw up to two bitcoins without providing any identification. It also lists a number of coins that have proven useless, including the TerraUSD Algorithmic Stablecoin that crashed last year. To cryptocurrency critics, Binance is raking in profits from retail Degen that they can barely comprehend.
It is a well-known fact that He Yi and CZ have a child, which is an open secret among those in the know of the cryptocurrency community. How would she describe their relationship? He Yi raised some objections to this.
“There’s a saying in the entertainment industry called CP, right?” She said it’s a Chinese Internet slang term, referring to fans’ desire for two people to establish a romantic relationship, whether on screen or in real life.
He Yi also referred to Zhao as a comrade-in-arms, and also called him a college roommate. Their connection started after she joined Binance, she said. He Yi drew an analogy to Amazon , where Jeff Bezos' ex-wife Mackenzie Scott was a contributor in the early days of the company, though He also admitted it wasn't a "perfect" example. . Among other reasons, Scott is not as deeply involved in Amazon's multibillion-dollar business as He Yi.
As for the similarities with SBF and Caroline, He Yi highlighted the differences.
“Here’s a significant difference: Caroline is an employee and I’m a partner, co-founders need more than a dating relationship. A co-founder relationship is about camaraderie, a dating relationship is about chemistry .The former is based on shared beliefs and transcends gender, the latter is based on physical attractiveness and selfish desires.”
Yi He also noted that her status as a cryptocurrency pioneer predates CZ. “I was the one who brought CZ into the crypto trading business, even without personal connections.”
"CZ brought me to Binance based on what I've achieved," He Yi added.
But the situation would raise red flags for regulators concerned about blurring lines and centralizing power. He Yi is in charge of the department that invests in cryptocurrency projects and the department that decides to list projects at Binance. Binance director Vishal Sacheendran said the Binance token listing team led by He Yi is so secretive that few insiders know its members. The company said this was part of an effort to reduce potential conflicts of interest. However, the business model sounds particularly opaque in the wake of FTX's collapse, in part due to the intricate relationship between its trading platform business and trading arm Alameda Research.
To be clear, large cryptocurrency exchanges often incorporate a range of financial services that would never exist under one roof in traditional finance. But He Yi’s diverse portfolio, as well as the opacity of management, speak to a sense of tight boundaries that still exist at the heart of Binance. For the record, He played down concerns about conflicts of interest. “A lot of the projects we invest in are not actually listed. There are different leaders and different teams, and the two teams are completely independent.”
Regardless, U.S. regulators appear determined to crack down on the cryptocurrency giant while declaring much of the industry illegal. Might have to give something. It’s unclear what specific concessions He and CZ are now willing to offer, though she acknowledges that the era of freewheeling cryptocurrencies is over.
He Yi said, "If you can't beat them, you have to surrender."
