CZ Says Binance’s Biggest Mistake Was Underestimating Regulation

Zhao says Binance moved too fast on the legal side and underestimated compliance. The comments come as the exchange remains under scrutiny, including in France and under the MiCA framework.

Key Takeaways

• CZ says his biggest mistake at Binance was not technical, but underestimating regulation, compliance, and politics.
• Binance grew into the biggest crypto exchange, but faced heavy pressure from regulators and paid a $4.3 billion settlement in 2023.
• Zhao now advises governments on crypto policy, while Binance came under investigation again in France in 2025.

Changpeng Zhao, better known as CZ, says Binance’s biggest mistake was not on the technical side, but on the legal one. Speaking on the Talking Tokens Podcast, the Binance founder reflected on the exchange’s early growth and said he badly underestimated regulation, compliance, and politics.

Regulation Mattered More

Zhao said that back in 2017, he was thinking mostly like a builder. His focus was on making a better product and keeping users safe, but he now says he did not fully grasp how much the legal side would matter. He also said he knew very little then about international law or how differently countries enforce rules.

That blind spot eventually came with a steep price. Binance went on to become the world’s largest crypto exchange, but it also drew intense pressure from regulators. In 2023, the company paid $4.3 billion in a settlement with U.S. authorities, one of the biggest corporate penalties in American history.

More Focus on Rules

CZ said he would now tell other founders to get the legal basics right from the start. In his view, crypto companies should not build the product first and worry about the rules later. Instead, they need to understand the regulatory environment from day one. He also noted that Binance did not launch futures until two years after it started, and said he would have moved faster on that front in hindsight.

Those remarks come while Binance is still under close scrutiny. In 2025, the exchange was investigated in France over alleged money laundering, fraud, and illegal financial activity. For European crypto readers, that matters because it highlights how quickly fast-growing platforms can run into tighter oversight, especially as MiCA raises the compliance bar across the EU. That same pressure has also shown up elsewhere in Europe, where Binance had already run into MiCA regulators in Europe.

From Founder to Policy Adviser

After pleading guilty in 2023, Zhao stepped down as CEO, paid a $50 million fine (€43.9 million), and served four months in prison. He later received a presidential pardon in 2025, roughly a year after his release. Today, he advises governments on crypto policy, the same area he says he paid too little attention to in Binance’s early days.