Binance's CZ Calls Hyperliquid 'Awesome' But Says He'd Never Run A No-KYC Exchange

CZ responded to Hyperliquid's decentralized branding by saying, "a small team controls the platform," citing his 2024 jail term for Binance anti-money-laundering violations.

• Binance founder Changpeng Zhao would never  establish a no-KYC exchange like Hyperliquid (HYPE), calling it "awesome."
• CZ said Hyperliquid co-founder Jeff Yan was a "very smart young kid" in an early YZI Labs incubation batch.
• Hyperliquid filled a need, CZ said, especially during the US-Israel conflict with Iran, when oil-linked perps rose over 5% following the Feb. 28 attacks.

Binance (BNB) founder Changpeng “CZ” Zhao said on Friday that he “would never” operate a no-KYC exchange like Hyperliquid (HYPE), citing his own legal history, while praising the platform’s innovation as “awesome.”

CZ was invited to appear on Galaxy Brains, the podcast run by Galaxy Digital (GLXY), and was interviewed by Alex Thorn, the firm’s company-wide head of research. When asked about regulatory issues regarding non-KYC exchanges, CZ explicitly stated in the interview that “I would never do what they do, given what I've experienced in my life," adding that he could not provide legal advice, and speculated that Hyperliquid had "good lawyers," earns substantial profits, and is fully capable of handling the relevant risks on its own.

CZ commented that Jeff Yan, co-founder of Hyperliquid, was among the first batch of entrepreneurs incubated by YZI Labs, the global investment firm of Binance. CZ stated that he never met Yan in person. He praised Yan as a "very smart young kid", noting that Hyperliquid has accurately filled a gap in the market. 

Hyperliquid bridged an obvious gap during the US-Israel war with Iran, when CME futures closed for the weekend after the strikes on Feb. 28, and oil-linked perps on Hyperliquid jumped more than 5%. JPMorgan later said the platform’s CL-USDC oil contract saw peak daily volume of $1.7 billion as non-crypto investors piled in for 24/7 macro exposure. 

HYPE’s price was trading at $70, up over 5% in the last 24 hours. The token has been up 177% so far this year. On Stocktwits, retail sentiment around HYPE remained in the ‘neutral’ zone, while chatter stayed at ‘normal’ levels over the past day. 

CZ Knows The Risks Firsthand

CZ stopped short of endorsing Hyperliquid's decentralization branding. He said the platform used smart contracts for deposits and withdrawals, but noted that "a small team that controls the platform" was the reality. "I'm not going to get into the definition of it, that's not my place," he said.

He also mentioned that U.S. users can access the platform via VPN, that it boasts considerable trading volume, and that it serves a user group that Binance is unable to serve.

In November of 2023, CZ admitted to violating the U.S. Bank Secrecy Act after he failed to maintain an anti-money laundering program at Binance, which processed transactions connected to sanctioned jurisdictions and illicit activity ranging from drug trafficking to terrorism financing. He was sentenced to four months in prison in April 2024, resigned as Binance CEO, and paid a $50 million personal fine, while Binance separately paid $4.3 billion in penalties to U.S. authorities.

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