Nikolas Sargeant
Binance, the world’s leading cryptocurrency exchange, has turned six. Binance was launched in 2017 and quickly rose to become the number one cryptocurrency in the world.
CZ Sends Anniversary Message To Binance Users
Changpeng Zhao (CZ), the CEO of Binance, sent an anniversary message to the company’s millions of users globally. In his note, CZ stated that;
“As Binance turns 6, it’s a chance to reflect on our journey together, share some stories and look ahead. What began as a mere dream, has turned into a global platform that provides financial access to more than 140 million people all around the world, and hopefully billions more to come.”
CZ revealed that in its early days, Binance raised US$15m equivalent in crypto and began its journey as a crypto-to-crypto exchange. The cryptocurrency exchange was launched two weeks after the funding round, with 5 tokens in 2 languages. In the early days, Binance had to borrow a customer support team and also had no marketing team.
Six years later, Binance supports 600+ tokens in 40+ languages, with thousands of employees within the customer support team. The cryptocurrency exchange’s BNB Chain also powers everything from decentralized exchanges to storage applications.
Shortly after Binance launched, it was forced to exit the Chinese market after the government issued a ban on crypto exchanges and ICOs. ICO projects in China had to return the investments received to their investors.
Following this latest development, Binance made a huge call to protect users as the prices of numerous coins and ICOs began to drop. Binance used $6 million (40% of its treasury at the time) to protect investors and their funds.
CZ added that;
“As it turns out, the world favors people who do the right things. Our actions received an overwhelmingly positive response from the global crypto community. Many users across the globe flocked to us. A month later, we reached 120k users and began to turn a profit. And we have been profitable ever since.”
A few months after it launched, Binance became the world’s largest cryptocurrency exchange by trading volume, surpassing its competitors. However, Binance’s growth didn’t come without its challenges.
A few days after becoming the leading exchange in the world, a potential VC investor brought an arbitration against Binance. It took multiple years to go through with this lawsuit. Binance won on all accounts.
CZ revealed that one side effect of the lawsuit was that it Binance from taking any VC investors. This increased Binance’s risk as a startup but helped the company in the long run as Binance remains an independent company.
An Evolving Regulatory Landscape
CZ also discussed the evolving regulatory conditions around the world regarding cryptocurrencies. In the early days, the cryptocurrency market was largely unregulated.
However, despite the lack of regulatory clarity, regulators globally have started to pay more attention to the crypto market. CZ stated that;
“BitFinex came under scrutiny in April 2019. And I set up Binance.US to specifically service the US market, in a fully regulated manner. Today, Binance.US has 43 state MTLs (Money Transmitter Licenses).
Globally, we have shown that compliance and innovation can exist hand in hand. We take pride in our licenses and registrations across 17 countries, a testament to our pro-regulation stance and the extensive efforts we have made in compliance and regulatory space. We believe that regulations, especially those aimed at protecting users and fostering innovation, are instrumental in the long-term success of the industry.”
Binance believes that regulation is a cornerstone of a robust, safe, and secure crypto landscape, and the crypto exchange will continue to work with policymakers to shape the future of digital assets.
Surviving The Crypto Winter
CZ also shared how Binance fared during its first cryptocurrency winter. Binance saw record user registrations in Jan 2018 (240,000 users registered in an hour). However, the market began to decline a few months later, with January 2019 marking the lowest point of the market. At that time, Bitcoin was around US$3,000 (dropped from $20,000 ATH).
Despite the bear market, Binance launched the Binance Launchpad in January 2019 in a bid to support more projects within the cryptocurrency ecosystem.
In the second winter, which commenced in 2022, the market was more volatile than what was experienced in 2018. However, Binance had minimal exposure to most of the “catastrophic” events in 2022.
CZ revealed that Binance invested in Terra in 2018, and never actively managed this particular investment. Binance saw its initial $3m investment back in 2018 turn into $1.6bn at Terra’s 2021 peak, and then down to close to $0 in 2022. Until today, the LUNA (now LUNC) tokens Binance received still sit on the address.
He added that;
“Binance had no exposure to 3AC (Three Arrows). No loans and no commercial relationships. They had an account with us but did most of their trading on FTX.
Binance invested in FTX early days and exited fully at an early stage. This was one and a half years before they crashed. This was also before most of their high-profile political donations. When FTX crashed, we tried to help.
We signed a LOI to do a deep DD (due diligence) but soon found we couldn’t get involved in the deal. That was the extent of our (non) involvement in the matter. I believe through the exhaustive investigations that must have gone into FTX post its bankruptcy, it should be clear Binance had no involvement in FTX, or there would have been many more headlines.”
Amidst the FTX saga, CZ media outlets tried really hard to group Binance and FTX together. However, Binance continues to show that it is different.
CZ clarified that Binance also had no exposure or involvement with Genesis and Celsius. Binance.US (independent from Binance.com) tried to help out in the Voyager case and put in a $10 million deposit payment. Eventually, Binance.US was forced to withdraw from the bidding process and never got the $10 million back.
2023 Market Recovery
The cryptocurrency market is currently recovering from last year’s winter, with prices of most coins up by nearly 50% year-to-date.
However, this year has also seen increased regulatory scrutiny on the industry. CZ said this doesn’t come as a surprise due to the events of 2022. He added that;
“And when regulators look at crypto, they look at Binance. It comes with size. And it is our responsibility to take the lead and work with regulators all around the world to move the industry forward.
Again, it won’t be all smooth sailing, but we will always do what we think is in users’ best interests. We will continue collaborating with regulators. We will also defend what we believe is right, even if we have to do it in court, to continuously protect our users and push for the benefit of the industry.”
Despite the challenges, the cryptocurrency market continues to evolve. Traditional financial institutions, including BlackRock, Citadel, and Fidelity, are coming into crypto in big ways. This is a validation of the technology and the industry. They will ease the institutional adoption of crypto. As institutional investors own the majority of the equity market, with hundreds of trillions of dollars, even a single digit % conversion into crypto will easily multiply the size of the current crypto market.
Furthermore, Binance believes that DeFi will continue to accelerate. Newer wallet technologies are making it easier for users to hold their crypto assets on their own. More people will use DeFi products and interact directly with blockchains. This also offers financial access to people where TradFi (or banks) have no penetration.
CZ concluded that;
“It is my strong belief that DeFi will become bigger than CeFi in the next 6 years or so. Regulatory clarity and regulated exchanges will continue to grow. As much uncertainty as there is right now, progress is being made at a faster pace in many countries to provide clarity for the crypto industry. It is absolutely clear that the countries that get this right first will enjoy a huge advantage over countries that don’t, for centuries to come. We are at a pivotal moment in history.”
The cryptocurrency exchange will continue to focus on its users, providing them with services that will make it easier for them to access the cryptocurrency market.
