Chen Yizhou's investment path: from Renren to SoFi encryption bank

Author: Dongcha Beating

Original title: Chen Yizhou, who caused the closure of Renren, turns around and launches the first cryptocurrency bank in the United States.

In November, American fintech giant SoFi announced the full opening of cryptocurrency trading to all retail customers. This comes just three years after it obtained a national banking license in the United States, and now it has become the first true “crypto bank” in the U.S., even preparing to launch a dollar stablecoin in 2026.

On the day the news was announced, SoFi's stock price surged to an all-time high, with a market value reaching 38.9 billion dollars, and its increase since the beginning of the year has reached 116%.

The CEO of the campus network (later renamed Renren), Chen Yizhou, was one of the earliest investors in SoFi. In 2011, he was introduced to SoFi's founders by a Stanford acquaintance and decided to invest 4 million dollars after talking for less than five minutes.

Later, in a speech, he recalled this investment, saying: “At that time, I also didn't know about P2P lending; I thought this thing was great.”

A traditional financial license and a highly sensitive cryptocurrency business have been woven into the same story by SoFi. Before this, traditional banks on Wall Street dared not touch cryptocurrencies, while crypto giants like Coinbase could not obtain banking licenses. SoFi became the only outlier standing at the intersection.

But if you turn the timeline back, you will find that its starting point is not cool at all; it is neither a tech company nor a crypto company, but rather started out as the most traditional “matchmaking lending” like the P2P platforms of that generation in China. However, after more than a decade, they have taken completely different paths.

Across the ocean, China's P2P has become a thing of the past, from over five thousand at its peak to none surviving, the bubble of an era has finally burst, leaving behind hundreds of billions in bad debts and countless shattered families.

Why did one P2P platform head towards death while the other evolved into a new species called “crypto bank”?

Two Genes of P2P

Because their underlying genes are completely different.

The P2P model in China is essentially a business of “traffic + usury”, acquiring customers offline and online, with high interest rates and short cycles. Platforms do not consider long-term credit and do not need to manage customer relationships.

SoFi is a completely different species. In 2011, when China's P2P platforms sprang up like mushrooms after rain, SoFi was also born in a classroom at Stanford Business School. Four MBA students pulled together $2 million from alumni to make their first business, which was to lend $50,000 each to 40 classmates for their tuition.

SoFi's initial story is as simple as it gets: solving real borrowing needs on campus, with their first clients being their own classmates. This allowed SoFi to bypass the hardest hurdle from the very beginning, which is risk control.

It targets a group of the highest credit quality individuals in the United States, namely students from prestigious universities. These individuals have promising future incomes and very low default rates. More importantly, SoFi stands for “Social Finance,” and its original lending relationships came from alumni networks. Borrowing money from fellow alumni is essentially a form of familiar credit, and the alumni identity serves as the most natural guarantee.

Unlike the annualized interest rates of over twenty percentage points commonly seen in China's P2P lending, SoFi has kept its rates lower than those of government and private institutions from day one. It does not seek high interest margins; instead, it aims to attract the best young talent into its system, creating a long-term business relationship that can last ten or twenty years. Student loans are just the starting point, followed by mortgages, investments, and insurance, encompassing a complete financial lifecycle.

The essence of P2P in China is trading, a one-time deal; the essence of SoFi is service, a steady flow.

It was also at that stage that a group of investors willing to bet on “atypical finance” began to emerge.

Chen Yizhou, who works on the campus network, invested in this “Campus Loan.”

This step was precise, helping him to avoid the high interest rates and the quagmire of capital pools that followed the P2P trend in China, instead hitting the mark with a financial services company that has the aura of an elite club.

This investment also inspired another Chinese investor. Zhou Yahui, the founder of Kunlun Wanwei, was deeply inspired after seeing Chen Yizhou invest in SoFi and decided to invest in the domestic company Qufenqi. Zhou Yahui later referred to Chen Yizhou as his “mentor.” However, Qufenqi took a different path, entering the campus loan market with high interest rates, ultimately falling into significant controversy and regulatory turmoil.

Just three years after Chen Yizhou invested in SoFi, in the fourth quarter of 2014, Renren launched its own campus loan product “Renren Installment.” This time, Chen Yizhou was no longer the investor who “didn't understand P2P,” but a savvy operator. Renren Installment provided installment loans to students, charging installment repayment fees and interest, while also launching “Renren Wealth Management” as a P2P wealth management platform.

Since then, China's P2P industry has stepped on the gas pedal. Campus loans were just the entry point, quickly extending to cash loans, consumer loans, and asset-backed financial products. High interest rates, fund pools, and guaranteed returns have become mainstream practices. Renren Credit chose to exit the student consumer loan market in May 2016, shifting towards installment loans for used car dealers, which, to some extent, was a quiet exit before the industry truly spiraled out of control.

2018 was a watershed year for the industry.

China's P2P lending surged amid regulatory gaps and exorbitant interest rates, leading to a collective collapse this year, with platforms shutting down and assets evaporating, quickly heading towards a comprehensive exit. By November 2020, Chinese P2P platforms completed their exit, and all industry entities were liquidated.

As the industry was being liquidated, the person who first bet on SoFi was also drawing a conclusion on this investment. Chen Yizhou, through a series of internal transactions, stripped the SoFi equity held by Renren and transferred it to a company he controlled, then sold it at a low price to buyers including SoftBank. Minority shareholders were furious, the New York court intervened, and the lawsuit lasted for years.

In the eyes of many, this means that SoFi is just a chip that can be easily discarded, a footnote to the end of the P2P era. At the same time, the management of SoFi is working on another problem: it needs to transform from being “a subject of regulation” to “a part of the regulatory system.”

At that time, everyone believed that the fate of FinTech was to disrupt banks, but SoFi, as a FinTech company, went against the tide and chose to become a bank.

Life-and-death choices, from P2P to banks

In July 2020, when the entire FinTech community was talking about decentralization, cryptocurrencies, and disrupting banking, SoFi made a surprising decision by formally submitting an application to the Office of the Comptroller of the Currency (OCC) for a national bank charter.

This was like reversing history at that time. A star company labeled with technological innovation turned around to embrace the most traditional, most regulated, and also the least cool identity.

In the history of commerce, there are always such moments when everyone is rushing in one direction, and the person who turns back is either mistaken or sees further.

Why does SoFi do this? In fact, from the very first loan, this company has been more like a bank rather than a matching platform. It values long-term relationships, risk control, and the overall lifetime value of customers, rather than one-time interest income.

More importantly, the significance of a banking license for a financial company goes far beyond the two words “compliance”. On the surface, it means being able to accept public deposits, issue a wider variety of loans, and enjoy the protection of federal deposit insurance (FDIC); however, the real power of the license lies in its ability to lower the overall cost of capital.

The cost of capital is an eternal pain for FinTech companies.

Before obtaining a banking license, SoFi had to rely on external financing and bond issuance, which are costly and unstable. Once it has the license, it can accept large-scale savings deposits like all traditional banks. The cost of these funds is typically only 1% to 3%, while the financing cost in capital markets often ranges from 5% to 8% or even higher.

Under the scale effect in finance, this seemingly small cost difference can be infinitely amplified, directly determining a company's profitability and expansion speed.

SoFi's decision is essentially a strategic exchange; they choose to embrace regulation in exchange for a source of funding that truly belongs to the banking industry, a pool of capital with infinitely reduced costs.

The essence of finance is the game of money; whoever can obtain more money at a lower cost possesses the ultimate pricing power.

After a long wait and review of one and a half years, on January 18, 2022, the OCC and the Federal Reserve finally nodded. SoFi became the first large financial technology company in U.S. history to obtain a full bank charter.

SoFi was able to obtain this precious license precisely because it spent ten years proving to regulators that it is not a “barbarian.” Its business model is robust, and its risk control record is good; from the regulatory perspective, it is a “trusted innovator.” In contrast, its competitors, whether they are aggressive Crypto companies or slow-moving traditional banks, cannot follow the path that SoFi has taken.

But this victory did not come without a cost.

A regulatory document from September of the same year clearly stated that after obtaining a license, SoFi could not engage in any cryptocurrency-related services without further approval. In other words, SoFi had to abandon its cryptocurrency business, which was at the peak of popularity at the time. In the eyes of regulators, a real bank must prioritize stability and cannot seek both a license and the peak of popularity.

The moment SoFi complied with the suspension actually conveyed a signal to regulators that it was willing to restrain itself according to banking standards.

It is worth noting that prior to this, SoFi had already launched cryptocurrency trading in early 2020, allowing users to buy and sell mainstream cryptocurrencies such as Bitcoin and Ethereum on its platform. Although this business is not large in scale, it represents SoFi's exploration of the emerging financial sector.

In 2021, it coincided with the boom of cryptocurrencies, with Bitcoin soaring from $29,000 to a new high of $69,000 that year. That year, competitors like Coinbase and Robinhood made a fortune from crypto trading. However, SoFi took the initiative to surrender before the dawn.

What was Chen Yizhou doing at the critical moment when SoFi made a drastic decision for a banking license?

In October 2021, due to allegations of “asset stripping”, a New York court seized 560 million dollars in assets belonging to his private company OPI. Under immense pressure, he ultimately chose to settle with minority shareholders, paying at least 300 million dollars in compensation.

On one side, there is a company betting on the future, exchanging long-term space in the safest yet least sexy way; on the other side, the earliest investors are settling old accounts and being forced to pull out.

The Birth of Crypto Banks

SoFi has chosen a more difficult yet steadier path that is not a shortcut: first becoming a regulated bank before pursuing its desired innovations. This strategic patience is the biggest distinction between it and most FinTech companies.

So, where is the direction it really wants to go?

After obtaining a banking license, SoFi's business model underwent a fundamental transformation. The most direct change is the explosive growth in the scale of deposits.

With savings rates far above the market average, SoFi has attracted a large number of users. These continuous and low-cost deposits provide ample ammunition for its lending business.

The financial report data clearly shows this change, with deposits rising from 1.2 billion dollars in the first quarter of 2022 to 21.6 billion dollars by the end of 2024, an 18-fold increase in two years. It has grown from a large-scale wealth management platform to a medium-sized national bank. By the third quarter of 2025, the company's net income reached 962 million dollars, a year-on-year increase of nearly 38%.

The lowest cost is the highest barrier. While other FinTech companies are still struggling with expensive financing costs, SoFi already has a “money printing machine” on par with traditional banks. In just two years, it has completed the leap from platform to bank, completely leaving all competitors behind.

What truly changes the landscape of the industry is the authority brought by the license. Without a license, cryptocurrency business is merely an incremental business of FinTech; with a license, the same business is incorporated into the banking system and becomes a formal service within the compliance framework. These are two completely different forms of discourse.

On November 11, 2025, SoFi dropped a bombshell in the market, announcing that it would reopen cryptocurrency trading services to its retail customers after a pause of nearly three years.

This means that SoFi has become the first and only financial institution in U.S. history to hold a national banking license and offer mainstream cryptocurrency trading.

SoFi is actually creating a brand new financial species. It has the stability and low-cost funding of traditional banks, while retaining the flexibility of FinTech and the imagination brought by crypto businesses. For users, it feels more like a “one-stop financial supermarket,” where savings, loans, stock buying, and cryptocurrency investments can all be done within one app.

Its innovation lies not in inventing something new, but in integrating two seemingly opposing systems, banking and cryptocurrency, into a coherent whole. Wall Street analysts are generous with their praise, believing that what SoFi currently demonstrates is the closest combination to the ultimate form of FinTech.

Looking back from this perspective, the decision to actively abandon the cryptocurrency business in 2022 was actually a well-thought-out retreat to advance. At that time, it let go of short-term growth, but gained the most scarce trump card in the entire industry. And when it returns to the table in 2025, there will be no opponents left for it.

Anti-consensus

Traditional bank stocks on Wall Street are generally sluggish, with price-to-earnings ratios hovering between 10 and 15 times. However, SoFi's price-to-earnings ratio is as high as 56.69 times, with the market valuing it not as a bank, but as a technology company.

This is SoFi's biggest achievement, as it is both a bank and does not operate like a bank.

For the past fifteen years, the grand narrative of the entire FinTech industry has been to disrupt traditional banking with technology. Coinbase talks about enabling everyone to trade cryptocurrencies; Robinhood speaks of a zero-commission trading revolution; Stripe focuses on making payments as seamless as possible.

But the story told by SoFi is completely different. It says that we want to become a bank first, and then use our identity as a bank to do things that others cannot do.

The “compromise” and “surrender” of 2022, looking back three years later, are precisely the most radical innovations.

Today, SoFi's story has reached a climax, but it is far from its final chapter. After SoFi has become the only “crypto bank,” where will its next battleground be? Will it continue to expand its lending scale, delve deeper into the crypto business, or leverage this unique identity to open up possibilities that we cannot yet foresee?

This company started from P2P and has squeezed its way forward through the regulatory cracks, and now stands in a position that the entire industry never imagined.

In the beginning, no one would associate SoFi with the term “crypto bank”; in 2025, no one could predict its next fifteen years.