Forbes: Who is Chen Guangying, the mysterious executive behind Binance who holds funds
Disclaimer: The following does not represent the views of Odaily, nor does it constitute investment advice.
Disclaimer: The following does not represent the views of Odaily, nor does it constitute investment advice.
Binance CEO Changpeng Zhao’s (CZ) mysterious partner Guangying Chen has emerged as a key player in the company’s operations and is the subject of a recent SEC lawsuit.
In the SEC's massive lawsuit against cryptocurrency exchange Binance (Binance) and its founder Changpeng Zhao, one name comes up time and time again: Guangying Chen."Heina" Chen）。
When Binance established its subsidiary in the United States in 2019, Chen Guangying’s name appeared on the list of signatories for its bank account. When Changpeng Zhao set up a secretive company in Switzerland, allegedly to artificially boost Binance US’s crypto trading volume, Chen Guangying’s name appeared on bank accounts and on boarding documents. In the complaint filed by the US Securities and Exchange Commission against Binance for allegedly "fraudulently exaggerating the trading volume", a "logistics manager" who executed false transactions was mentioned: she is also Chen Guangying.
Chen Guangying does not appear to have any official title or public appearance at Binance, although a Binance filing obtained by the SEC describes her job as “financial director.” In September last year, Changpeng Zhao mentioned in a blog post that she was in charge of "administration and settlement," which was the first time the company publicly acknowledged Chen Guangying's existence. However, the Forbes investigation found that besides CEO Zhao Changpeng, Chen Guangying serves as a director of more Binance entities and controls more bank accounts.
According to the SEC, she is currently a director of eight key Binance companies and has served as a signatory on dozens of bank accounts for 27 entities registered in 13 countries, overseeing the company's funds and a series of the operation of the company. Since 2019, these accounts have made deposits and withdrawals at Signature Bank and Silvergate Bank, totaling $148 billion. However, the accounts were all closed or had zero balances by May of this year, and the two banks declared bankruptcy in March.
“Changpeng Zhao trusts Chen Guangying,” said a former Binance executive who worked with Chen Guangying and Changpeng Zhao. “She is the gateway to Binance Finance.”
Court records, land deeds and company documents in China, Malta, Singapore, Switzerland and Turkey, as well as four former Binance employees and an outside consultant who had contact with or worked with Chen Guangying, the Forbes investigation found, portrayed Taking the image of a mysterious crypto leader, she has been following Changpeng Zhao around the world. According to court documents, Chen Guangying, who has received at least $32 million in wages since 2019, has signed on and overseen some of Binance’s most dubious and significant business deals, allegedly in order to artificially inflate trading volumes on the platform to Sparking the interest of customers and investors is also the focus of the SEC charges. She also played a key role in multiple entities used by Changpeng Zhao for his lifestyle, including the purchase of a $55 million plane and an $11 million yacht, according to the SEC.
"(Chen Guangying) is the gateway to Binance Finance." - Former Binance executive
Such transactions are now at the heart of regulatory issues at Binance, with extensive investigations by the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission. The exchange is also reportedly facing an investigation by the U.S. Department of Justice for alleged violations of Russian sanctions and anti-money laundering laws, with Senator Elizabeth Warren calling on the Justice Department to investigate the company’s misrepresentation practices. (Binance responded to Warren’s letter saying the company “supports U.S. efforts to oversee regulation” and “takes compliance issues very seriously.”)
In a statement released on June 5, Binance expressed its "disappointment" with the SEC's complaint and said the company would "vigorously defend against any violations that put users' assets on Binance US at risk." Firmly defend the allegations in the Neither Chen Guangying nor the company responded to requests for comment for this story.
While Changpeng Zhao’s crypto empire has so far survived the collapse of its biggest competitor, FTX, and the contagion that brought down crypto lending platforms Celsius and Genesis, it now faces an existential threat. Binance, which claims to have no headquarters, has exited or been banned in at least 10 countries. In April, Australian authorities revoked the financial services license of Binance’s Australian subsidiary, resulting in the subsidiary being abandoned by the payment service provider. In May, the Ontario Securities Commission launched an investigation into whether Binance circumvented the province’s securities laws, prompting Binance to withdraw from Canada two days later and file an application to drop the probe.
Trading volume on Binance has dropped 32% since the SEC allegations became public. In the U.S., where Binance serves more than 5 million customers, trading volumes have fallen by more than 75%, and the SEC has ordered the freezing of more than $2.6 billion in assets, effectively halting Binance’s operations in its largest market. Binance suspended all U.S. dollar deposits for its U.S. operations last week.
“(The SEC) is not interested in a solution that would allow Binance to operate in a manner close to its current form,” said Renato Mariotti, a former prosecutor in the Justice Department’s Securities and Commodities Fraud Unit.
Despite the adversity, Changpeng Zhao remains one of the richest men in the cryptocurrency industry; Forbes estimates he is worth at least $10 billion, though that figure could be significantly higher depending on how much of the Binance profits Zhao keeps for himself. Forbes’ SEC records and company filings in 30 jurisdictions show that Changpeng Zhao owns 100% of Binance International and 81% of Binance US.
“(Chen Guangying) is the real CFO.” - Former Binance Advisor
The mysterious Chen Guangying still controls the assets of Changpeng Zhao and Binance. “All control of Binance is in Heina’s hands,” said a former Binance executive. "(Changpeng Zhao) only trusts very few people who have access to funds."
In one case, Binance attempted to acquire a bank in Liechtenstein when Binance’s chief financial officer, Wei Zhou, negotiated the deal and met with local regulators. But it was Chen who wired $5 million in escrow from a Binance Bank account linked to Liechtenstein-based Frick & Co. Bank, according to two people with knowledge of the deal and bank documents seen by Forbes. A Forbes-vetted proof of Binance’s assets and liabilities, seen by regulators in Liechtenstein, was signed by Chen Guangying’s DocuSign (signed by her nickname “Heina”), not Zhou Wei’s (Zhou Wei’s signature). Wei did not respond to Forbes' request for comment).
"It's all in her hands," one of the sources added. "She is required when it comes to things like fund transfers or confirmation of funds, as she is the authorized person for all bank accounts."
"She's the real CFO," the source said.
Little is known about Chen Guangying's life before joining Binance. According to her LinkedIn profile, she holds a bachelor's degree in accounting from Shanghai University of Finance and Economics and an MBA from the National University of Singapore.
Although Chen Guangying has played an important role in the company since its establishment in 2017, the company did not acknowledge her existence until responding to a reporter's question in September last year. Changpeng Zhao wrote in a blog post titled "Who is Chen Guangying, Is Binance a 'Chinese Company'?" that he "met her at a friend's wine shop" in 2010. According to a former Binance executive, Chen Guangying also provided drinks for the poker nights he hosted in Shanghai. "He changed her life," the former executive added.
In the blog post, Changpeng Zhao said that Chen Guangying worked in a logistics management role at a "large commercial bank" before he hired her to work at his new crypto company, Bijie Tech, a cloud services startup that provides software to support crypto exchanges . In his blog post, Changpeng Zhao wrote that he listed her as a Chinese national as a listing representative due to Chinese laws restricting foreigners such as him as a Canadian citizen.
“(Chen Guangying) will go wherever (Changpeng Zhao) goes.” - Ex-Binance employee
Chinese company files reviewed by Forbes show that while Zhao Changpeng was listed as the CEO of the company (Shanghai Bijie Network Technology Co., Ltd.), it was Chen Guangying who actually controlled the company. She owns 93% of the shares and is listed as the founder and sole legal representative.
Changpeng Zhao founded Binance in Shanghai in 2017 after Bijie was forced to shut down its exchange clients reportedly due to massive fraud. Likewise, corporate documents in China show that the company was established in the name of Chen Guangying as the legal representative, and that she owns 80 percent of its shares.
Rumors of Chen Guangying's covert control of Binance began to circulate in 2020 when a friend of a disgruntled Binance user publicly lambasted the company on Chinese social networking app Weibo, claiming his friend had lost money on the platform. 167 bitcoins. Several Chinese websites published his post and an email from Chen Guangying received by his friend, in which she warned that “your behavior may be seen as malicious against us, and we may reputation damage, manipulation of public opinion, and even defamation."
Chen Guangying seems to have held different positions at different times. On her LinkedIn profile, she states that she is "responsible for middle and back office management, including finance/human resources/administration/settlement, etc." Specifically mentioning Binance. In a Telegram message seen by Forbes, former Binance chief financial officer Wei Zhou referred to her as Changpeng Zhao’s “personal financial manager.” In a 2020 certification shared with the Liechtenstein regulator, Chen listed his position as a "backoffice supervisor"; the SEC referred to Chen in its complaint as Binance's "backoffice manager." When Chen Guangying was introduced to outsiders in emails seen by Forbes, she was introduced only as Binance’s “vice president.” A former Binance executive who spoke with Chen on the phone told Forbes that they don’t think she has a formal role, but that she plays an important role in the “finance department.”
Changpeng Zhao himself has tried to downplay her role: In a blog post last year, he said that Chen Guangying was in charge of the "administrative and settlement team". But despite Zhao’s claims that she primarily served as the legal representative while Binance was still based in Shanghai, Chen’s central role in Zhao’s corporate entity extends far beyond China. After the Chinese government's crackdown on crypto exchanges led to Binance looking for a new home, Zhao Changpeng established two companies in Malta in 2018, and Chen Guangying was appointed as a director of both companies the following year, according to Malta's business registration records. and sole legal representative.
"Guangying had to leave her family, home and friends when most of us left China in 2017,"Zhao wrote last year."It's a huge sacrifice, and she's one of the very few who truly understands how it affects us all.
As for her current whereabouts, Mr. Zhao stated in his 2022 blog that Ms. Chen is"A passport holder of a European country where he lives quietly with his family"。
But the latest documents reviewed by Forbes in business registries in Malta and Singapore appear to contradict that. According to Malta's registration information, Ms. Chen updated her documents last June to register a new Chinese passport. China does not allow dual citizenship, and the documents show she lives in Singapore. This seems to be consistent with Mr. Zhao's claim that Ms. Chen"Live quietly in a European country"statement is contradictory. Her LinkedIn profile shows that she is currently based in the United Arab Emirates, while Mr Chao is relocating to the country from Singapore in 2022.
A former Binance executive said:"She (Chen Guangying) will go wherever (Mr. Zhao) goes."
Binance’s planned move to Malta fell through in February 2020 when the country’s financial services regulator declared that the company was not authorized to conduct cryptocurrency business. As Binance expanded into new markets, Ms. Chen was involved in the operations of subsidiaries in at least 15 countries, including Canada and Kazakhstan, as a director and bank account signatory, according to court documents and company filings.
In 2019, when Binance launched a separate U.S. exchange as part of a plan to convince regulators that data and funds of U.S. customers were managed and stored by a U.S. team, Ms. Chen was put in charge of managing U.S. exchanges. Executives and bank account signatories of U.S. companies doing business. The 2019 Binance US exchange’s year-end balance sheet cited in the SEC filing shows that at the time, Ms. Chen was the sole signatory for all nine of the company’s bank accounts.
To bolster local operations, Zhao used a new company based in Switzerland, with Ms. Chen as a director and bank signatory, to conduct what the SEC accused of being a massive fraud on the U.S. platform, according to SEC filings and corporate records. The company, called Sigma Chain AG, was set up as a so-called market maker, using “revenue generated from the difference between bid and ask prices” and backed by “funds from [Mr. Zhao’s] personal account,” which is According to the onboarding documents of the Binance US exchange in the SEC filing.
However, unlike typical market makers that independently conduct high-frequency trading on exchanges, Sigma Chain used so-called "wash trading" techniques to artificially inflate trading on Binance America, according to the SEC. volume, that is, sending crypto assets back and forth to create the illusion of customer activity.
According to the SEC’s allegations, on the day Binance US launched in September 2019, Sigma Chain conducted false transactions to create the illusion that the exchange was busy. In the summer of 2021, when Binance’s U.S. arm was in talks to raise $200 million with investors including Foundation Capital and Circle Ventures (the deal was eventually closed in March 2022), the SEC alleged that Sigma Chain’s accounts on the platform were 51 out of 58 cryptocurrencies had fake transactions. Then, in the first half of 2022, as the Binance US exchange listed dozens of new crypto assets, Sigma Chain, according to the SEC, conducted fake trades in 48 of these 51 newly listed assets. In a filing responding to the SEC’s complaint filing, Binance’s lawyers stated that “the so-called manipulation of transactions alleged by the SEC is entirely legal and in no way has material consequences.”
However, within the Binance US exchange, Sigma Chain’s activities have drawn the attention of Binance US employees. According to SEC filings, Catherine Coley, the former CEO of Binance’s U.S. division, raised concerns in 2019, saying in a letter to Binance’s then chief financial officer, Zhou Wei, that Ms. Chen Becoming a signatory on the bank account would be a “warning signal for regulators and expose [Binance] to US scrutiny”. When a sales director told Binance US CEO and employees in January 2021 that 20 accounts belonged to Sigma Chain, an employee responded with “wow.”
In the process, the lines between the Binance subsidiary and entities controlled by Mr. Zhao and Ms. Chen began to blur. Entities owned by Zhao and controlled by the pair mixed about $11 billion in customer deposits with Binance’s bank accounts, according to SEC data. In addition to the bogus transactions, Sigma Chain was also used to purchase $11 million worth of yachts and personally pay Ms. Chen $32 million.
Despite Mr. Zhao's claim to eschew material luxuries and traditional banking, Ms. Chen also acted as a bank signatory on several transactions to finance Mr. Zhao's lavish lifestyle. “No house, no car, no boat, no fiat currency,” he tweeted in 2020. Another company Mr. Zhao owns, British Virgin Islands-based Binance Capital Management, according to SEC filings , spent $55 million on a private jet and distributed $62.5 million to one of his personal bank accounts. The firm and two other Binance entities controlled by the pair also transferred $178 million to two Singaporean companies controlled by Mr Zhao and Ms Chen.
However, working closely with Mr. Zhao has not always worked in Ms. Chen's favor. In a blog post last year, Mr Zhao expressed regret for asking Ms Chen to be his legal representative in 2015 because she had come under so much scrutiny. "She and her family have been attacked and harassed by the media and trolls," he wrote. "Had I known how negatively it would affect her life, I would never have asked her to make such a seemingly innocuous move."
