The History of Binance: What to Know
Binance is the largest cryptocurrency exchange in the world if measured by daily trading volume. This massive platform was founded in 2017 by Changpeng Zhao (better known as “CZ”) in China and has since become a leader in the crypto space.
Initially working as a designer of high-frequency trading systems for stockbrokers, Changpeng Zhao was well-equipped to enter the budding crypto sphere and become one of the world leaders. After launching in 2017, Binance would end up bouncing around its headquarters to different countries, hoping to avoid legal action and oversight. Eventually, the company would settle in the Cayman Islands, with a secondary company, Binance.us, located within the United States.
- Year Founded
- Changpeng Zhao, Yi He
- Cryptocurrency Exchange, Cryptocurrencies
- China then moved to the Cayman Islands
- Key People
- Changpeng Zhao, Yi He
- Notable Products
- Binance Crypto Exchange, BNB (and associated tokens)
By January of 2018, Binance had already become the world’s largest cryptocurrency exchange with billions of dollars in daily trading. In 2021, the company reached a peak 24-hour volume of over $76 billion, far surpassing any competitors. Additionally, the launch of BNB, the Binance-created crypto-token, soon became the world’s third most traded token, behind only Bitcoin and Ethereum.
Currently, Binance is embroiled in international controversy related to money laundering, fraud, sharing client data, and more. Still, it retains its top spot as the highest volume cryptocurrency exchange in the world by a substantial margin.
The Founding of Binance: How it Happened
Binance was founded when CEO Changpeng Zhao created the platform to provide users the ability to trade money and improve the lives of others freely.
CEO Changpeng Zhao had a substantial lead in the field and had spent years working at a company that built high-frequency trading systems for stockbrokers in China. In 2013, Changpeng Zhao joined Blockchain.info, a crypto wallet company, as a member of their team. Additionally, Changpeng Zhao spent a year at OKCoin, a platform designed for spot trading between fiat and cryptocurrencies. This experience and history with trading platforms and the investment in early cryptocurrency platforms allowed the company to develop a substantial lead among its international competitors.
Although the company was initially founded in China, it began to look for different options when the Chinese government began to crack down on cryptocurrency trading in 2017. Initially moving to Japan, opening an office in Malta, and signing documentation in Bermuda, finance finally solidified its location in the Cayman Islands.
Currently, the company and its affiliates operate all over the world.
Binance Through The Years
Binance was founded in 2017 by current CEO Changpeng Zhao. It was initially founded in China but eventually moved its servers to Japan by September of 2017, when the Chinese government began heavily regulating the crypto market. In June, the company launched its own token, BNB. It would later become the third most traded token in the world.
By 2018, Binance had already become the largest cryptocurrency exchange in the world, with a market cap exceeding $1.3 billion. In March, the company attempted to move its headquarters to Malta as Japan began instituting stricter crypto regulations. Additionally, the company would initiate paperwork with Bermuda and Malta to develop a security trading platform. That same year, the company announced Binance Jersey, a separate entity from Binance that is located in Jersey, an island country near the coast of France. Binance Jersey would allow Binance to offer fiat-cryptocurrency exchanges using the British Pound and the Euro.
In January 2019, Binance partnered with Simplex to offer crypto purchases with a debit or credit card. In May, it was announced that the company was the victim of an attack where $40 million was stolen. In September, the company began offering perpetual futures contracts allowing for 125x leveraging on the contracts. Additionally, Binance.us was launched in nearly all of the United States.
In October 2020, staff from Forbes released documents that Changpeng Zhao had created a structure designed to deceive US regulators and profit from investors within the country. In September, the company launched BSC, or Binance Smart Chain, a blockchain ecosystem.
In May 2021, Binance came under the investigation by the IRS and the US Department of Justice for potential money laundering and tax avoidance. These investigations would continue and are currently ongoing.
In February 2022, Binance took a large position of $200 million in Forbes, the company that released documents only a few years earlier. That same year, the company also announced it wouldn’t cease activity in Russia, in stark contrast to the rest of the world. That stance would later change as they began restricting Russians with more than 10,000 Euros from trading on the platform.
What Are the Most Important Inventions From Binance?
The primary product of Binance is its cryptocurrency exchange. Through the Binance Exchange, users can purchase cryptocurrencies with fiat, as well as buy, trade, and sell around 500 tokens. Binance.us currently offers trading on around 50 tokens.
BNB is the official cryptocurrency for the Binance platform. After its launch in 2017, BNB soon became the third most traded token by volume in the world, behind only Bitcoin and Ethereum. BNB can be used to pay fees on the platform and is a payment method for various companies, including travel, entertainment, and financial services.
BSC, or the Binance Smart Chain, is a parallel chain created alongside the Binance Chain. BSC was created to seamlessly work with Ethereum, act as a Proof of Staked Authority (PoSA consensus), and further deepen the scope for the associated DApps that operate using BNB and BNB Smart Chain.
How Does Binance Make Money?
Binance, like most exchanges, makes money from transaction fees accumulated for each trade initiated on the platform. Additionally, the company receives funds from the sale of its native token, BNB. Additionally, the company sets the trading fees according to the type of currency being traded, monthly volume, and level of the customer initiating the trade. Binance has a net income of $900 million in 2020.
2018: Trust Wallet – Undisclosed
Binance acquired Trust Wallet, an American company, in July of 2018. Trust Wallet is a large cryptocurrency wallet that operates on mobile phones, namely Android and iOS. The purchase of Trust Wallet allowed the company to further expand its offerings to users.
2019: Binance JEX – Undisclosed
Binance acquired Binance JEX, a Singapore-based company, in September of 2019. Binance JEX is a crypto futures options and exchange platform. The acquisition of Binance JEX allowed for the further expansion of the exchange and the trading of futures.
2019: WazirX – Undisclosed
Binance acquired WazirX, an Indian company, for an undisclosed amount in November of 2019. WazirX was the leading bitcoin exchange in India. The acquisition allowed for further expansion into Indian markets.
2019: DappReview – Undisclosed
Binance acquired DappReview, a Chinese company, for an undisclosed amount in December of 2019. DappReview was a ranking site that ranked various decentralized app platforms. The acquisition allowed the company to expand into the DApp market and create content.
2020: BxB – Undisclosed
Binance acquired BxB, a South Korean company, in March of 2020. BxB is a stablecoin creator that offers globally accessible stablecoins backed 1:1 by the Korean Won. The acquisition allowed the company to further enter the South Korean market and expand its stablecoin offerings and expertise.
2020: CoinMarketCap – $400 million
Binance acquired CoinMarketCap, an American company, for $400 million in April of 2020. CoinMarketCap provides data on cryptocurrencies, helping users to form opinions and stay up to date on various crypto events and news. The acquisition further allowed the company to create crypto content and gather data on crypto trends.
2020: Swipe.io – Undisclosed
Binance acquired Swipe.io, an English company, for an undisclosed amount in June of 2020. Swipe.io is a crypto wallet that offers crypto-to-fiat funded credit cards. The acquisition allows the company to further enter the English market and begin creating financial products using crypto.
Binance Notable Controversies
2019: Security Breach
In May of 2019, Binance experienced a security breach where hackers stole 7,000 Bitcoin, worth around $40 million at the time. Customers were reimbursed through the SAFU account (Secure Asset Fund for Users.)
2020: Deceitful Corporate Structure
In October of 2020, staff members of Forbes released documentation alleging that the structure of Binance was intentionally misleading and designed to fool US regulators. Additionally, it was intended to show users how to bypass the IP block placed on the company.
2021: IRS Investigation
In 2021, the IRS and the United States Department of Justice began reviews on Binance after allegations of fraud, money laundering, and tax evasion. Investigations are still underway.
2022: Russian Sanctions
In 2022, Binance refused to freeze Russian accounts amid the Russian invasion of Ukraine. They would later soften their stance and froze accounts with 10,000 Euros or more.