(Bloomberg) -- In mid-May, cryptocurrency exchange Binance got some bad news in a far-flung corner of its sprawling universe.
Binance’s payments partner in Australia had abruptly cut it off, meaning local customers couldn’t deposit Aussie dollars on the platform via bank transfer. The hit to business was immediate, with Binance halting all Aussie trading pairs about two weeks later, along with bank withdrawals of the local currency.
Add one more headache to the swelling list of challenges facing Richard Teng, the civil servant-turned-crypto executive who’s seen as a possible heir to Binance’s embattled chief executive officer, billionaire Changpeng “CZ” Zhao.
Teng has emerged as the frontrunner to take over as CEO should Zhao relinquish that position, according to people with direct knowledge of the matter. The succession issue has taken on additional urgency as US regulatory scrutiny of Binance mounted in recent months, the people said.
The Commodity Futures Trading Commission sued Binance and Zhao himself in late March for allegedly violating derivatives regulations, and accused it of having “sham” compliance. On Monday, the US Securities and Exchange Commission filed its own suit against Binance and Zhao, alleging that the firm flouted investor protection rules by operating unregistered exchanges, misrepresenting trading controls and selling unregistered securities, among other violations.
Binance didn’t respond to requests for comment on succession. Zhao has disputed the characterization of many of the issues alleged by the CFTC.
Read more: SEC Sues Binance and CEO Zhao for Breaking US Securities Rules
Binance still handles more trading than all other top centralized crypto exchanges combined, yet never has its position seemed so precarious. At least four US federal agencies are investigating or bringing enforcement action against it, and regulators in Canada and Australia are looking into its business. Even Dubai, Zhao’s adopted home and seen as a free-wheeling crypto hub, has tightened scrutiny of license applicants including Binance.
Two months before Binance Australia said payments-solution provider Cuscal had pulled support for Aussie dollar deposit services, a UK banking partner stopped providing support to the exchange for transactions in British pounds.
This is the bleak environment into which Teng, a 52-year-old Singaporean, has been thrust following a meteoritic rise in his less than two years at Binance. In late May, Zhao appointed him as head of all regional markets outside the US, which is run as a separate entity.
The apparent bet: Teng’s resume, with senior positions at Singapore’s central bank and Abu Dhabi’s international free-trade zone, makes him the ideal candidate to help steer Binance through the regulatory hurricane bearing down on it.
Teng’s appointment “checks the boxes for trust,” said Campbell Harvey, a finance professor at Duke University. “Binance is signaling that they want to work with the regulators.”
The CFTC and SEC lawsuits are perhaps the most imminent regulatory challenge for Binance, but they are far from the only ones. The US Justice Department is investigating whether its platform was used illegally to let Russians skirt US sanctions and move money, Bloomberg News reported in early May.
Binance announced in May that it plans to exit Canada — two months after its local affiliate filed paperwork to commit to registration — citing new regulations that made the market “no longer tenable” for it. It’s currently locked in a dispute with the Ontario Securities Commission.
Read a timeline of Binance’s history with regulators
Teng worked for the Monetary Authority of Singapore, the city-state’s central bank, for 13 years until 2007, according to his LinkedIn profile. After that, he was at the Singapore stock exchange, working as chief regulatory officer. Then came a six-year stint running Abu Dhabi Global Market. He has a Master’s degree in applied finance from the University of Western Australia, his profile shows.
He joined Binance in August 2021 as Singapore CEO and, in Zhao’s telling, his hiring was swift even by crypto’s standards.
The two men were introduced by an employee at Singapore’s central bank, Zhao said at Binance’s weekly Twitter Spaces on May 31.
“They said look, this is Richard, he’s a cool guy,” Zhao said. “And so I talked to him. Within two weeks we reached a deal to hire him.”
One of Teng’s first tasks was to help Binance secure a license in Singapore, at the time one of the most coveted seals of approval in crypto. “That actually didn’t work out, but Richard had done phenomenal work during that process,” Zhao said.
The application failed because Binance’s affiliate didn’t meet criteria for protecting against money laundering and terrorist financing, Bloomberg News reported in January 2022. Binance denied that at the time, saying it withdrew the application on strategic and commercial grounds.
Read more: Singapore’s Wary Crypto Embrace Leaves Top Mogul in the Cold
The setback didn’t appear to hurt Teng’s prospects at Binance. In December 2021, he was promoted to head of the Middle East and North Africa, and was given oversight of Europe less than a year later, according to his LinkedIn profile. Just a month before receiving his current title, Asia was added to the regions under Teng’s purview. He’s now based in Dubai, where Binance has more than 500 employees.
On paper, at least, Teng cuts a very different figure to Zhao. He spent almost two decades in total working for government entities. At Singapore’s stock exchange, he ran a group that enforces rules in areas including listings, trading and clearing, working closely with the MAS, his LinkedIn profile says.
580 Flight Hours
Zhao, meanwhile, had an itinerant lifestyle for years after starting Binance in China in 2017. He appears to have finally settled on Dubai as his home. In the past few years, his company has been the subject of an array of regulatory rebukes and probes from the US to Thailand. At times, Zhao struck a defiant tone in defending Binance, arguing that it’s difficult to work with regulators who don’t grasp the fundamentals of crypto.
The contrasts extend to how the two men express themselves publicly. Zhao, until recently a regular on the crypto-conference tour who’s said he spent 580 hours in the air in 2022, often takes to Twitter to disparage news reports he dislikes (he has 8.4 million Twitter followers). His tweets regularly include crypto jargon like FUD (Fear, Uncertainty and Doubt) and SAFU — a play on the word “safe” that’s an acronym for Binance’s emergency reserve to protect customer assets.
Teng is more scripted, preferring to stick to corporate messaging about Binance’s expansion in various regions and regulatory milestones.
Teng’s rise has seen him join an inner circle of Zhao confidants that includes He Yi, Binance’s other co-founder with whom Zhao has two children. In a recent interview, He, who oversees Binance’s $9 billion venture capital arm, pointed to Teng’s regulatory background when asked about his advance, but said other qualities played in as well.
“I think he is a very seasoned, professional manager,” she said. “Since he joined Binance, his scope has been continually expanding, and we all like and recognize Richard.”
Teng’s recent promotion isn’t the only sign that Binance is gearing up for a period of increased regulatory scrutiny — one in part ushered in by the rapid demise last year of FTX, the crypto exchange that was seen by many as the most potent challenger to Binance’s dominance. Zhao himself helped accelerate FTX’s demise when he tweeted that Binance was offloading its native crypto token, called FTT.
Earlier this year, Binance hired former Gemini Trust Co. Chief Operating Officer Noah Perlman — whose resume also includes a six-year stint as global head of financial crimes at Morgan Stanley — to run its compliance operations. The company’s compliance team has swelled to more than 750 people over the past two years, Chief Strategy Officer Patrick Hillmann said in February.
--With assistance from Muyao Shen and Leen Al-Rashdan.
(Adds SEC lasuit in fifth paragraph.)
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