How did Binance become the world’s number one cryptocurrency exchange within 165 days of its establishment?

“At 42 days, Binance ranked tenth globally in trading volume; 92 days, fifth globally; 156 days, third globally; 165 days, global first, until now.”

At the end of 2022, Binance CEO Zhao Changpeng (CZ) became the uncrowned king in the cryptocurrency field. The sudden collapse of its rival FTX has doubled Binance’s market share. However, the success is also accompanied by increasing regulatory pressures.

1. The king of the market

Sam Bankman-Fried (SBF), co-founder of FTX, Binance’s biggest rival, approached CZ in November, wanted Binance’s CEO to bail out its own exchange. CZ refused, which almost determined the fate of FTX.

On November 10, the day before the crypto empire FTX filed for bankruptcy, SBF tweeted a message to his rival: “ Good job, you win.”

The collapse of FTX has made Binance the undisputed “leader” in the coin world, controlling more than half of the fast-growing cryptocurrency market by the end of 2022.

If Binance could ride the regulatory shock after the FTX collapse, it would become the preferred venue for cryptotoken trading, and CZ could make itself the “acceptable face” of cryptocurrencies, though many still see the market as the wild West.

“Many people see SBF as the leader in the industry and saved the industry from regulators,” said Charley Cooper, former chief of staff of the Commodity Futures Trading Commission (CFTC). “ When FTX collapsed, everyone saw CZ as a potential savior for the future of the industry.”

However, while the price of major cryptocurrencies such as Bitcoin stabilized after the FTcollapse, Binance was in trouble. Its size is destined to make it a target for regulators and lawmakers who want to ensure that broader financial markets are never affected by “big-to-fail” cryptocurrency exchanges.

2. The regulatory storm is coming

Binance has faced a huge regulatory challenge after the collapse of the FTX. Us financial regulators have filed a series of charges against Binance, including illegal service to American customers and improper control of customer assets.

Other players in the crypto industry, such as representatives of the DeFi project Phuture, have also expressed concern about the size of Binance, as a departure from the industry’s decentralized intention.

3. Get growth at all costs

Since its inception in 2017, CZ has encouraged employees to work to expand market share. This rapidly expanding culture attracts large numbers of employees, but it also brings about an internal high-pressure management approach.

In addition, Binance has a loyal following, known as the “Binance Angel”, and these “volunteers” provide plenty of support for Binance’s community and business.

4. Confidentiality and security

With the rapid development of Binance, the company has also strengthened its internal security and confidentiality requirements. The instructions in the entry document to shut down geographic tracking and avoid disclosing personal information show Binance’s emphasis on security.

5. The “encirclement and interception” of supervision

Binance, the cryptocurrency exchange, grew rapidly when it seized on the uncertainty of cryptocurrency regulation. Zhao Changpeng (founder of Binance), who called himself a “freedom advocate” at a conference in Shanghai, disliked “too many rules,” which enabled Binance to quickly emerge in the cryptocurrency space.

But he also admits that he does not fully agree with countries about the nature of cryptocurrencies, even if some of them involve legal issues.

But as its business has expanded, Binance has gradually become the focus of regulators.

· At first, Beijing dealt a heavy blow to the initial coin issue.

· Binance then shifted its business to Japan, but encountered regulatory problems and even warned employees not to use corporate mailboxes to communicate with outside entities in Japan.

· Soon after, Thailand also filed charges that Binance operated a digital asset business without a license.

· In 2021, financial regulators in the UK and Singapore took action against Binance.

· The Netherlands has also fined him for related reasons.

As time continues, Binance has faced friction with the world’s major financial regulators. By 2022, France will allow Binance’s subsidiaries to become digital asset service providers, which seems like good news. But then it emerged that French police were investigating Binance’s local operations.

In early 2023, Binance planned to buy crypto loan company Voyager for $1 billion, but was opposed by the Securities and Exchange Commission. Then, New York Financial Services intervened in the issuance of the Binance brand crypto token BUSD. Later, the Commodity Futures Trading Commission sued Binance for illegally contacting American customers. The incident has further exacerbated the conflict between Binance and U. S. regulators.

Binance also seems to be not quiet inside. One former employee said that despite the company’s apparent emphasis on community culture, this was not the case. Some employees said they did not given the respect they deserve.

Recently, Binance plans to cut jobs involving about 8,000 employees. While the exchange said the move was not due to the size of the company, people familiar with the matter said market pressure forced Binance to make the change.

Overall, Binance’s current predicament reflect the turmoil in the entire crypto industry.

Ending

Binance and compliance are a very controversial topic. In most countries, Binance is not compliant.

Especially the dispute between Binance and the SEC. While Binance has been sued by the SEC, most observers agree that this is only a prelude to a stronger struggle, and that the real big one should be ahead. And binance’s pursuit of compliance process can basically string up the entire binance’s company history, which is worth detailed later.

Binance is like a map full of the fog of war, and because of this, Binance is destined to be one of the most important companies of its time.