Author: Tuo Luo Finance
A photo of Bao Er Ye brings back memories of the past.
Recently, Bao Er Ye suddenly shared a photo of Zhao Dong standing in Crypto Valley on social media. In the photo, Zhao Dong is wearing a white sports jacket, smiling brightly, full of hope for life. After the news was released, it sparked a rare wave of nostalgia on social media, with some even speculating that Zhao Dong had been released from prison, which is why he appeared in the United States. Although Bao Er Ye later clarified that this was a photo from 2018, Zhao Dong still stirred slight ripples on the calm surface of the cryptocurrency world.
Why does the cryptocurrency community show so much concern for a "veteran" who is already behind bars? Zhao Dong may seem ordinary, but his story is worth hearing.
Born in 1982 in a rural area of Shanxi, Zhao Dong graduated from Dalian Jiaotong University. Unlike other ambitious students, Zhao Dong even failed courses and was demoted for two years in college, but this led him to learn software technology and embark on a path as a tech geek. Riding the wave of the internet, Zhao Dong, after graduation, teamed up with his university classmate Jin Li to create an internet weather forecasting app—Moji Weather. While most people may not be familiar with this app today, in 2011, this tool app had already surpassed ten million users, making it a leading tool app at the time. There seemed to be a natural divide between tech geeks and business, and as the team continued to expand, conflicts increased. In 2012, Zhao Dong ultimately left Moji Weather. Fortunately, he successfully made his first pot of gold, reportedly around 7 million.
After leaving Moji Weather, Zhao Dong did not remain idle and quickly joined Garage Coffee as CTO, starting his second entrepreneurial venture. In 2013, it happened to be the time when Bitcoin made its first leap, and the magic of Garage was that most of the big names in the cryptocurrency world, such as Li Lin, Xu Mingxing, Zhao Changpeng, Chang Jia, and Bao Er Ye, gathered there. From that moment, Zhao Dong's journey in the cryptocurrency world began. Introduced by his friend Wu Gang, CEO of Bixin, he spent 400 yuan to buy his first Bitcoin, officially entering the digital currency space. Before buying Bitcoin, Zhao Dong, with his technical background, was already deeply attracted by the blockchain logic of "code is law," and after personally trying to buy Bitcoin, he became unstoppable.
His first investment was 10,000 yuan, buying 10 Bitcoins. Within two weeks, the price skyrocketed, and seeing the profits, Zhao Dong increased his investment to 500,000 yuan, then to 1 million yuan. As Bitcoin continued to soar, Zhao Dong's wealth also grew rapidly. By the end of 2013, he held over 15,000 Bitcoins, which, at the then market price of 8,000, made his net worth exceed 100 million yuan. If calculated at the current price of 110,000, the total value could reach 1.2 billion dollars. With existing connections and real profits, Zhao Dong's understanding of the cryptocurrency world was no longer limited to arbitrage and spot trading; he began to transition from an investor to a deep builder, not only engaging in futures contracts but also venturing into the mining industry.
However, market education is equal for everyone. In 2014, the Mentougou incident caused Bitcoin to plummet from over 600 dollars to 102 dollars. Zhao Dong, who had been increasing his leverage, suffered a heavy blow. According to his revelations in a WeChat group, on February 10, 2014, he faced a liquidation loss of over 9,000 Bitcoins in one day, equivalent to 8 million dollars at the time. This was just the beginning; losses from mining farms followed suit. In 2014 alone, Zhao Dong lost over 150 million yuan, and at his most difficult time, he had only 100,000 yuan in cash while carrying 60 million yuan in debt.
It was from this point that the cash-strapped Zhao Dong discovered the opportunity in over-the-counter (OTC) trading. At that time, OTC was undoubtedly a rigid demand for all cryptocurrency people; how to successfully cash out the money from trading was a problem everyone faced in the market. Leveraging his strong connections and resources, Zhao Dong focused on facilitating trades and successfully built a vast OTC network. He profited from the transaction fees and price differences between buyers and sellers.
According to his account, "Relying on the credit I had accumulated before, I gradually engaged in OTC trading. At my worst, a single trade was less than 3,000 yuan, with a profit of 60 yuan. At my best, a single trade was nearly 100 million dollars." In August 2015, Zhao Dong posted on Weibo that he achieved a trading volume of 30 million in a month, with a transaction fee of 2%. With such profits, in less than two years, Zhao Dong not only paid off his debts through OTC but also experienced a rebirth, establishing DFund, a fund focused on blockchain, taking advantage of the ICO wave. Zhao Dong also became a preacher of Bitcoin; in a widely circulated image, his statement "If you don't buy Bitcoin this year, it will be 100,000 dollars when you think of it again" became prophetic. Interestingly, although DFund claimed to have invested in many star projects, many investors on Weibo reported that they had not received dividends.
In 2016, Bitfinex was hacked, with nearly 120,000 Bitcoins stolen, totaling over 65 million dollars in value. As the world's largest Bitcoin/USD trading platform, this theft caused a stir in the market. Zhao Dong was also one of the victims; as compensation, he received BFX tokens issued by Bitfinex, marking the beginning of his connection with Bitfinex.
It was also based on this that Zhao Dong connected with Tether, the issuer of USDT, through Bitfinex and further expanded into lending services, becoming a well-known Chinese platform for USDT. Against this backdrop, in 2019, Zhao Dong founded the P2P lending and wallet startup Renrenbit, further expanding his business territory. For a time, Zhao Dong was in the limelight, making waves in the cryptocurrency world.
However, flowers do not bloom for a hundred days, and people do not have good fortune for a hundred days. Just as Zhao Dong's career was thriving, he soon encountered trouble. On July 2, 2020, market news reported that Zhao Dong had been taken away by the police. This news was later confirmed. The charges against him changed repeatedly; initially, he was arrested for illegal business operations, but later he was sentenced to two years for money laundering and aiding and abetting, and during the trial at the Hangzhou West Lake District People's Court, it was discovered that he was also involved in illegal foreign exchange trading.
According to a typical case of punishing illegal foreign exchange crimes published by the Supreme People's Procuratorate on December 27, 2023, Zhao Dong's main actions crossed legal red lines in two major ways. First, he engaged in illegal payment settlement services. Knowing that the source of others' funds was illegal, he still used his personal bank account to receive RMB and exchanged it for virtual currency, profiting from a transaction amount of over 24.29 million yuan. Zhao Dong made a profit of 35,000 yuan; second, he engaged in illegal foreign exchange trading. He provided foreign currency and RMB exchange and payment services for others, with an exchange amount reaching over 43.85 million yuan from March to April 2019, making a total profit of over 870,000 yuan.
Compared to his wealth, the profits were not significant, but the matter was indeed serious. Ultimately, Zhao Dong was sentenced to seven years in prison, falling from the heights of an OTC tycoon to a prisoner. Looking back at Zhao Dong's experience, from starting with one Bitcoin to doubling his wealth, then facing liquidation and bankruptcy, rising again through OTC, and finally ending up in prison, his tumultuous journey is filled with legendary colors, and his personal experience has also become a microcosm of the industry's development.
Thus, when Bao Er Ye posted the photo recently, many speculated whether Zhao Dong had indeed been released, sparking widespread discussion. Of course, with Bao Er Ye's clarification, there were also insiders who spoke out, indicating that Zhao Dong had not yet been released. According to information disclosed by the Xijiao Prison in Zhejiang Province, last month, Zhao Dong applied for parole, but it has not yet been successfully processed.
That said, although Zhao Dong has suffered in prison, once he is released, he will still be a tycoon holding substantial wealth. This is because he holds early shares of Tether, and the Bitcoin that is passively locked up is now valued highly. Therefore, after his release, Zhao Dong will still be a prominent figure in the cryptocurrency world.
2013 was the year of the collective rise of cryptocurrency OGs, but looking at the current development of these OGs, one can't help but sigh that everyone has their own fate. Kuaimao has been missing without a trace, Hui Yi committed suicide, Li Xiaolai made a fortune and then turned around with the statement "Bitcoin is a scam," while Bao Er Ye remains active on the front lines, embarking on a luxurious life journey, even buying a vegetable farm. Xue Manzi built a small road for himself but still couldn't resist launching projects to profit from others.
Interestingly, almost all the exchange tycoons are still active on the front lines. Although Huobi, founded by Li Lin, has changed hands, it has made a comeback in Hong Kong with New Fire Technology. Sun Yuchen, Xu Mingxing, and Zhao Changpeng have all left the mainland, each having received a legal package, but they have now become pillars of the cryptocurrency world. Sun Yuchen is focused on marketing, and Tron’s popularity remains undiminished. Xu Mingxing, with the idea of donating to the country at any time, is about to list OKX, while Binance has become the largest exchange globally and has connected with Abu Dhabi. Although Zhao Changpeng spent four months in prison and is no longer the CEO of Binance, he still firmly holds the helm.
Now, with the regulatory environment in the United States and regions like Hong Kong relaxing, the cryptocurrency world has undergone a transformation. As Paul S. Atkins, chairman of the SEC, stated at the first OECD Global Financial Markets Roundtable, "We must acknowledge that the era of cryptocurrency has arrived," the new era of cryptocurrency is indeed unfolding. However, even with the U.S. president supporting it, the cryptocurrency world is no longer universally criticized but is forced to adhere to traditional financial rules, experiencing growing pains of adaptation. The once wild west has faded away, and the time for digging gold in gray areas is no more. Traditional institutions have arrived at the center of power in the cryptocurrency world, and among the original OGs, those who remain and can develop, along with their freedom, are better described as fortunate rather than outstanding.
In April of this year in Hong Kong, this group of former OGs gathered once again, toasting and sharing stories, playing out a scene of laughing away past grievances. That said, while wealth is indeed valuable, freedom is even more precious. The OGs who enjoy both wealth and freedom seem to have little expression on their faces other than smiles.
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