Original author: Jaleel, Joyce, Sharon, Zhang Wen, Rhythm BlockBeats
A fine of US$4.3 billion is the largest fine in the history of Chinese entrepreneurship.
The only thing that can be compared with this amount is Alibabas 18.2 billion yuan fine two years ago, which is only 65% of the worlds largest cryptocurrency trading platform Binance. Even looking at the global Internet giants, the US$4.3 billion fine is one of the largest in history.
From recording a video introducing Binance in front of his Shanghai company 6 years ago to using a $4.3 billion fine and the condition of his resignation to keep Binance afloat, founder Changpeng Zhao only spent 6 years, with the support of the cryptocurrency trend. , turning Binance into the worlds largest cryptocurrency trading platform with 150 million users and thousands of employees around the world, and it is also one of the most successful overseas companies.
This is also destined to be a week recorded in the history of the technological Internet. AI and Crypto are two of the most dynamic and most watched areas of the technological Internet, two top influential companies, OpenAI and Binance, the founders of Binance. He resigned from office successively for different reasons.
The 6 years of the CZ era were also the 6 years of Crypto’s booming development and wealth effects, and Binance’s role in it, especially in establishing confidence in the industry in the bear market, also contributed a lot.
Now that regulation has been implemented, no matter what happens to Binance in the future, we still want to record the 6 years of Binance, the choices CZ and another co-founder He Yi made at the right time, in the context of Bitcoin’s main rise. , the right time, right place and right people, this may be the greatest six years for Chinese entrepreneurship.
Screenshot of CZ’s early entrepreneurial video “The Iron Triangle of the Currency Circle” and the Birth of Binance
In 2014, Changpeng Zhao was just a Canadian technology returnee, serving as the technical director of the cryptocurrency market website Blockchain.info. Once, He Yi held an event for OKCoin in Hangzhou, and CZ was a guest. After hearing CZs sharing, He Yi admired his talent and asked him for WeChat after the meeting.
Later, He Yi wanted to advertise OKCoin on Blockchain.info, so he approached CZ and wanted some discounts, but CZ told He Yi, Our advertising does not offer discounts. He Yi, who was rejected, became more optimistic about CZ. He Yi believes that he did not influence his decision-making because of favors and was very professional. Then he introduced CZ to Xu Mingxing and recruited him to join OKCoin.
CZ, who just joined the company, has done a very good job. In addition to being responsible for the infrastructure, custody and security of on-chain transactions, all product development is managed by CZ. Because his English is good, CZ will also be responsible for overseas market promotion. In this way, the Iron Triangle of the Currency Circle that has resounded in the crypto industry for 14 years was formed.
The Iron Triangle of the Coin Circle was featured in the high-end magazine Harpers Bazaar
Of course, it seems now that this triangle is actually not that iron. In the entrepreneurial world, one mountain can never accommodate two tigers. CZ and Xu Mingxing both have technical backgrounds. They often have differences due to differences in decision-making logic and cultural backgrounds.
At the end of 2014, CZ signed an agreement with its former owner Blockchain.info, under which OKCoin would be responsible for the operation of the Bitcoin.com domain name for five years, during which the advertising revenue of the website belonged to OKCoin. However, due to poor operating results, OKCoin hopes to terminate the cooperation early.
However, the owner of Bitcoin.com, Roger Ver, known as Bitcoin Jesus, believed that OKCoin should pay compensation on a monthly basis, and an economic dispute broke out between the two parties that lasted for several months.
To Xu Mingxings surprise, CZ strongly sided with Roger Ver in this dispute, pointing out that OKCoin violated professional ethics and forged his signature for bank transfers. Subsequently, OKCoin immediately issued a statement, saying that CZ not only forged the contract, but also fabricated lies to attack OKCoin.
In the end, the scolding war ended with OKCoin expelling CZ. As the introducer of CZ joining the company, He Yi was also caught in the middle of this controversy and was in a dilemma. In the second half of 2015, He Yi bid farewell to OKCoin in a low-key manner.
After leaving OKCoin, He Yi chose to join Yizhi Technology, which had a market value of 20 billion yuan at the time. In June 2017, CZ officially established Binance. In July 2017, Binance launched its own platform token BNB with an issue price of 1 yuan. But not long after it went online, BNB fell below the issue price, and one BNB was only worth 5 cents. At that time, Binance was scolded miserably. He Yi later recalled that it was the most stressful period for CZ. He lost 10 kilograms in three weeks.
Two months after the establishment of Binance, He Yi decided to bid farewell to technology and chose to return everything to zero and start from scratch to jointly build Binance with CZ as CMO. As soon as the news of He Yi joining Binance was announced, the price of BNB rose in response. The trading volume of BNB and the newly launched BTM token on the platform immediately surged, ranking 10th in the world in terms of trading volume.
He Yi also brought his previous operating experience from Yizhibo to Binance. Giving away coins and luxury cars during the live broadcast may seem simple and crude, but it has actually gathered a lot of traffic for Binance. On August 22, Binance conducted a live broadcast with Justin Sun to talk about the Tron project. During the live broadcast, a TRON snap-up event was launched, and 500 million TRON were sold in just 53 seconds. TRON was recognized on the spot as the No. 1 ICO project in the second half of 2017.
On August 25, Binance and Sequoia China signed an investment letter of intent. The letter of intent stipulates that Sequoia China will invest approximately 60 million yuan in Series A financing in Binance, accounting for 10.7% of the shares. At the same time, Sequoia China agreed to provide a bridge loan worth approximately 30 million yuan to Binance’s Japanese branch. Binance’s valuation suddenly reached 500 million yuan.
During the September 4th crisis, Binance completed “overtaking at the corner”
Seeing that Binance is developing at a rapid pace, the arrival of September 4th has directly poured cold water on the entire currency circle, including Binance. On September 4, 2017, the country took a heavy blow against the chaos in the cryptocurrency industry. Seven government ministries and commissions announced that they would stop all token issuance and financing activities, including ICO. As soon as the news came out, Bitcoin plunged, and everyone thought that cryptocurrency was going to die.
Of course, for Binance, 94 is a rare overtaking opportunity. Binance has always only been engaged in currency transactions, and the company’s servers are also registered overseas. CZ itself is still a foreigner, so it is natural to take the international route: “Since China cannot do it at the moment, we have decisively withdrawn from the Chinese market and focused on international business. .”
What impressed many investors at that time was Binance’s “market price withdrawal” for Chinese investors.
According to industry regulations, if the issuance price is one yuan, then only one yuan will be refunded when liquidating, and the principal will be returned to investors. However, Binance decided to liquidate BNB at the market price. At that time, BNB experienced a round of surge and the price was still around 6 yuan after the September Fourth Movement. There were many projects involving ETH. Binance also refunded the currency at the market price of ETH and subsidized it. Got a lot of money. For Binance, although it suffered losses this time, it won the trust of the industry.
Since then, Binance has been under pressure to promote on social media, and on the other hand, it has taken the lead in opening its trading platform in Japan to fill the vacancies in domestic trading platforms. Suddenly, a large number of domestic users such as OKCoin and Huobi moved to Binance, and Binance began to make rapid progress again.
On December 15, 2017, Binance, which was founded half a year ago, announced its operating data: it ranks among the top three in global trading volume, its 24-hour trading volume exceeded 2.1 billion US dollars, and BNB’s market value increased by 100% month-on-month. On December 18, Binance’s single-day trading volume exceeded US$3 billion, becoming the world’s No. 1 crypto trading platform. On the 19th, the number of Binance users exceeded 2 million, and then jumped to 5 million in less than a month.
On January 10, 2018, Binance’s trading volume exceeded US$10 billion; in February, CZ appeared on the cover of Forbes magazine.
CZ on the cover of Forbes magazine
Of course, it’s not all plain sailing for Binance. Late at night on March 7, 2018, Binance was attacked by hackers. Many users found that the tokens held in their accounts had been traded into Bitcoin at market prices, causing the prices of most currencies to fall. After triggering panic selling, the hackers bought all the Bitcoins held in the stolen accounts into a token called VIA, causing the price of VIA to surge by more than 110 times in a short period of time, which in turn caused the price of Bitcoin to rise within an hour. fell more than 10%.
After the incident, Binance was criticized for stealing by itself and blaming the hackers.
At the end of 2017, the financing negotiations between Binance and Sequoia China broke down, and CZ and Sequoia began a dispute that lasted more than a year. In 2018, Sequoia Capital applied for an injunction from the Hong Kong High Court to prohibit Changpeng Zhao from negotiating with other investors. After the Hong Kong High Court rejected the injunction appeal, Changpeng Zhao publicly challenged on Twitter on May 7, 2018, saying that all projects listed on Binance in the future need to disclose whether they are directly or indirectly related to Sequoia Capital.
Related Reading:Changpeng Zhao sues a subsidiary of Sequoia Capital and demands compensation》
CZ’s tough attitude has once again greatly increased Binance’s popularity in the crypto circle. In 2018, Benben Finance counted the Baidu search volume, media information volume, fan volume and other data of the founder of the crypto exchange at that time. Binances name firmly ranked first, with exposure far exceeding other competitors.
Source: Running Finance
After the September 4th Incident, under the regulatory pressure of various countries and the high degree of discrimination by the Western media, many domestic exchanges began to downplay their Chinese elements in order to continue their business. As Binance went global, He Yi gradually retreated behind the scenes, and CZ stepped onto the stage.
At that time, the foundation and ecology of the blockchain industry were still immature, but Binance decided to try it in the upstream, midstream, and downstream of the industry, as well as in all directions.
Upstream established Binance Labs, which initially only made investments in some industries, but later also introduced old money from traditional finance. Midstream has created Binance Smart Chain to provide incubation space for projects in a more encrypted and native way. In an interview in 2018, Ella, then the head of Binance Lab, revealed BSC’s launch plan. Of course, there are also the downstream extensions of Binance Info, charity, etc. in the industry.
Another thing Binance did in 2018 was to acquire Trust Wallet.
This is Binance’s first public acquisition. He Yi recalled that when he found Trust Wallet, the team was already planning to issue coins, so the initial impression was not very good. But after using and experiencing the product, He Yi quickly decided to have a chat with the other party. In August, Binance announced its acquisition of Trust Wallet.
CZ was very excited about the acquisition of Trust Wallet. At that time, he posted a series of tweets on Twitter, claiming that the next generation of mobile wallets was about to begin, and also compared Trust Wallet to an unpolished diamond, alluding to Binances plans. Expand and integrate its wallet solution into Binance’s services. Trust Wallet is now the leading wallet with the largest market share.
2019, a turning point in Binance’s history
If we look back now, 2019 may have been a turning point in Binance’s six-year history. During this year, Binance broke through the war of attrition fought by many exchanges and began to gradually distance itself from its peers.
Many people believe that Binance’s breakthrough in 2019 was due to its innovative IEO model. In January 2019, taking advantage of overseas advantages, Binance announced the restart of Launchpad and took the lead in embarking on the IEO journey. The first project was Justin Sun’s Bittorrent (BTT), which was sold out in less than 13 minutes after it went online.
Looking at it now, the Bittorrent project may not be worth mentioning, but at that time when there was no fluctuation or hope, the impact of a project that was 20 times online on the market was immeasurable.
Facts have also proven that Binance has become the most successful among IEO players, not only earning enough attention, but also attracting users from other platforms. Seeing Binance’s failure, Huobi and OK immediately joined the “IEO Club”.
But in fact, it was not just the new model of IEO that led Binance to finally break through, because by May or even the end of the year, the three major exchanges were still fighting for the contract market. And CZs confidence does not only come from the victory of IEO. In 2019, Binances work efficiency and progress in all aspects can be described as horrible.
After setting off the IEO wave in January 2019, Binance then launched Binance Smart Chain (now BNB Chain.) in February; in May, CRED, the first DeFi project on the chain, was launched. At the same time, Binance opened leverage and contract trading, officially entering the market. Derivatives market; in June, Binance Labs announced the incubation of 13 new projects; in July, Binance.us was established; in September, Binance successively launched BUSD, financial products and staking platforms; in December, Binance acquired JEX and launched Binance Cloud , and a landmark event-investing in FTX.
During the extremely cold moments of the market, Binances multiple business lines moved forward simultaneously, trying every means to increase trading volume and allow funds to flow back. This year, Binance’s business progress has gradually been reflected in the company’s profits.
On September 19, 2019, Changpeng Zhao announced on Twitter that the total transaction volume of Binances platform in the past 24 hours was approximately 7.12 billion yuan. Changpeng Zhao said that this is only a small step for Binance.
Someone calculated an account for Binance based on the value of the legal currency destroyed by BNB in the third quarter. In the third quarter of 2019, even though the transactions in the crypto market were declining, Binance’s profits were still increasing, even more than in the second quarter. Around $10 million.
Related Reading:Conversation with Changpeng Zhao and He Yi: People don’t need to know about Binance in the future》
On its third anniversary, Binance is already the platform with the largest trading volume in the industry, and the total value of Binance’s platform currency BNB exceeds US$2.4 billion. (*According to the proportion of platform currency repurchase and destruction)
Binance has built its own ecological landscape in 3 years, with 10 wholly-owned acquisitions and more than 20 investments. The total investment and acquisition amount is expected to exceed US$500 million. In April 2020 alone, the amount of the acquisition of the data aggregation platform CoinMarketCap was exposed. There are 400 million US dollars. In the first quarter of 2020, the total investment and financing amount in the blockchain industry was only approximately US$800 million, and Binance’s acquisition accounted for half of the total investment and financing amount in the industry in the first quarter.
At the same time, Binance has become increasingly controversial. Binance, which has always followed the High Level route overseas, has also adopted a glamorous young lady strategy. Co-founder He Yi also quarrels with friends and businessmen on social platforms almost every day.
The bigger controversy is at the business level. Last year, Binance also started leveraging its own Diss. In addition, as mentioned earlier, it acquired CoinMarketCap, the market platform with the largest traffic in the industry, in the first half of the year. This kind of behavior of athletes acquiring referees , causing more people to begin to denounce Binance.
After FTX collapsed, Binance became the first target of regulation
After the bankruptcy of FTX and last year’s cryptocurrency crash, regulatory lawsuits and other various cases against trading platforms have continued to increase, and Binance has naturally become the first target of regulation.
In fact, the U.S. Department of Justice may be the first to target Binance. Reuters quoted people familiar with the matter as saying that the U.S. Department of Justice’s investigation of Binance began in 2018 and included unlicensed remittances, money laundering and violation of criminal sanctions.
In 2019, Binance was banned in the United States due to regulatory reasons. In response, Binance and other investors opened Binance.US. In May 2021, Bloomberg News reported that Binance was under investigation by the U.S. Department of Justice and the Internal Revenue Service for money laundering and tax evasion. In December 2022, Binance.US, the U.S. entity of Binance, announced that it would acquire the assets of Voyager Digital in a $1.02 billion deal. The deal was canceled in April 2023 due to what Binance.US called a “hostile and uncertain regulatory environment.”
At the end of 2022, prosecutors from the U.S. Department of Justice had internal disagreements over whether to file criminal charges, including money laundering, against Binance. Some prosecutors believed that they had the most evidence to file criminal charges against Binance executives, including CZ. lawsuit; some prosecutors believe time is needed to review more evidence. Additionally, sources said officials from the Justice Department have discussed a possible plea deal with Binance lawyers.
Today’s outcome of Binance is also due to the leadership of the Ministry of Justice. On November 21, Bloomberg reported, citing people familiar with the matter, that the U.S. Department of Justice was seeking a fine of more than $4 billion from Binance as part of a proposed settlement of a years-long investigation into it. Today, Binance announced a settlement with the U.S. Department of Justice, the Commodity Futures Trading Commission, the Office of Foreign Assets Control, and the Financial Crimes Enforcement Network regarding historical registration, compliance, and sanctions issues. The settlement marks the companys acknowledgment of past criminal compliance violations and says it will use it as an opportunity to lay the foundation for the next 50 years. The U.S. agency’s settlement does not accuse Binance of misappropriating user funds or market manipulation.
CZ appeared in a Seattle court, source: GeekWire
In addition to the lawsuit from the Department of Justice, Binance has also been sued by the U.S. Securities and Exchange Commission (SEC) for alleged violations of securities trading rules. In June 2022, the U.S. Securities and Exchange Commission launched an investigation into Binance to determine whether the company’s 2017 ICO of BNB tokens constituted an illegal sale of securities.
The SEC accused Binance and CZ of illegally promoting crypto-asset securities to U.S. investors and trading them through unregistered online trading platforms.Binance.comandBinance.USBy conducting multiple unregistered issuances and sales of crypto-asset securities and other investment schemes, Binance and CZ made billions of dollars in profits while putting investors’ assets at significant risk.
The U.S. Commodity Futures Trading Commission (CFTC), which is opposite to the SEC, has been using Binance to make a fuss about the regulatory power over encryption. The CFTC obtained the chat records between CZ and employees through various means, and launched a lawsuit against Binance based on this. On March 27, 2023, the CFTC released litigation documents, mentioning multiple chat records about CZ’s use of the Signal chat application, including chats between him and Binance employees, US customers, etc. The chat records also mentioned instructions issued by CZ to employees, requiring them to use Signal to communicate about the U.S. ban.
The next day, CZ issued a response to the CFTC’s lawsuit on its official website, stating that Binance has cooperated with the CFTC for more than two years and expressed disappointment in its filing of a civil lawsuit. Upon preliminary review, the complaint appears to contain an incomplete statement of facts and we disagree with the characterization of many issues, including compliance technology and prohibiting access to U.S. users, cooperation and transparency with law enforcement, registration and licensing, transactions, and more.
Although CZ has repeatedly stated that Binance attaches great importance to compliance, Binance also applied to the court several times to cancel the CFTC lawsuit. But the tug-of-war came to an end today. CFTC Chairman Rostin Behnam said at a press conference on Tuesday that Binance’s behavior “undermines the foundation of safe and sound financial markets.” The CFTC charged it $1.35 billion in transaction fees. It is the largest fine ever imposed by the CFTC.
Related Reading:Why does everyone want to regulate Crypto?》
The end of the CZ era
November 22, 2023 is a day that will go down in history, especially when it comes to the history of Binance. After the news broke, Sister Yi responded to messages in various social groups to stabilize her mood, and even some discussions in groups that had been inactive for a long time. Whenever Sister Yi saw it, she would explain it in the group and continue her role as customer service.
In order to reach a settlement, CZ put aside the achievements of his six years of business and changed the path of Binances future stability. The settlement plan also means Binances recognition of past criminal compliance violations and stated that it will use this as an opportunity to Laying the foundation for development in the next 50 years.
At the same time, CZ also completed the strong mans broken arm and officially became a part of Binances history. He pleaded guilty to anti-money laundering and violation of U.S. sanctions and resigned as Binance CEO. The sentencing hearing is scheduled to be held in February next year.
Binance’s new CEO will be replaced by Richard Teng, the company’s former head of global regional markets. CZ pointed out in the open letter that Richard Teng will rely on his thirty years of financial services and regulatory experience to lead Binance into the next stage of growth and ensure that the company is safe and transparent. , compliance and growth developments. I will also continue to provide consulting services to the team, and plan to devote myself to passive investments in areas such as blockchain, Web3, DeFi, artificial intelligence, and biotechnology after a short break.
Super Jun once recalled a past event. Many years ago, he attended a blockchain conference and met some big guys at the time. During the period, a young man next to him took the initiative to take photos for him. And this young man is CZ.
No matter what he does right or wrong, CZ is indeed one of the most loyal believers in Bitcoin in the industry. This belief also allows us to witness the exaggerated speed of a company from scratch to the worlds number one. As the most important infrastructure for cryptocurrencies, CZ has accomplished its mission, but Binance has not.
