Changpeng Zhao and Chamath Palihapitiya both identified privacy as cryptocurrency's most critical unsolved problem during a two-hour All-In Podcast episode.
What neither the podcast nor the Phemex article reporting their comments mentioned: CZ's own fund made an eight-figure investment in a privacy-focused trading platform just weeks earlier.
What They Said
Zhao argued that Bitcoin's transparent ledger creates real-world risks for users at scale.
He cited a specific example: if someone books a hotel and their address becomes publicly traceable on-chain, it becomes a security concern.
Palihapitiya went further, saying that traceable transactions destroy Bitcoin's (BTC) fungibility because every coin carries a history.
He called this the reason he remains skeptical of Bitcoin maximalism - cryptocurrency cannot function as digital cash if every transaction is a matter of public record.
Both agreed that pseudonymity erodes further once exchanges apply KYC requirements, effectively attaching real identities to blockchain activity.
Their shared conclusion: without protocol-level privacy, cryptocurrency usage stalls at speculation and settlement rather than expanding into everyday payments.
The Financial Context
On Jan. 13, YZi Labs - the family office CZ co-founded with Yi He after leaving Binance - disclosed a "multi-8-figure" investment in Genius Trading, a privacy-focused decentralized trading platform. CZ also joined Genius as an adviser.
Genius uses multi-party computation to split trades across hundreds of wallets, reducing on-chain traceability for large orders.
The platform had processed over $60 million in volume during its beta and plans to launch a public privacy protocol in the second quarter of 2026.
YZi Labs manages roughly $10 billion in assets globally. The Genius investment was not mentioned during the podcast or in most coverage of CZ's privacy comments.
Read also: PEPE Volume Explodes 283%: Memecoin Rally Ignites February 2026
Why It Matters
The privacy argument itself has technical merit.
Bitcoin's transparent design does create surveillance risks, and on-chain analysts routinely trace whale movements, exchange deposits, and wallet balances - as this publication covers daily.
But when someone with an eight-figure financial stake in privacy infrastructure publicly advocates for privacy as cryptocurrency's top priority, that context is essential for evaluating the argument.
CZ is not a disinterested observer on this topic. The privacy debate is also not new.
Projects like Monero (XMR), Zcash (ZEC), and various zero-knowledge proof implementations have existed for years, and regulators have consistently pushed back against privacy features they view as enabling illicit finance.
Whether protocol-level privacy and regulatory compliance can coexist remains an open question neither speaker addressed.
Read next: Germany's Second-Largest Exchange Bets Big On Crypto With Tradias Merger