How has Binance, the world’s largest cryptocurrency exchange, made changes to consolidate its position, which is being eyed by many competitors, after facing legal crackdowns from U.S. authorities ?
The year 2023 ended with a record fine of $4.3 billion between Binance and the U.S. government. Along with this came a series of terms that the exchange had to comply with, as well as forcing founder Changpeng Zhao to resign as CEO.
Many see this as a setback for Binance, having to pay such a large sum and deal with ongoing legal troubles. But more than that, it could be seen as the end of a long chapter in the history of cryptocurrency, marking the conclusion of the “borderless crypto” ideal.
Binance turns a new page under the leadership of the new CEO Richard Teng, a person with deep experience in regulatory compliance.
Since then, nearly half a year has passed, and the crypto market in 2024 is also a different reality compared to the end of 2023. So how has Binance developed and changed under the leadership of this CEO?
Table of Contents
Frequent launchpool and dense listings
The most obvious change is the rapid pace of new listings, with a frequency that is more continuous than in previous periods. Particularly at this time, Binance has almost separated the listing of futures and spot markets, with many coins being opened for futures trading while not being listed on the spot market.
In fact, the practice of opening futures trading pairs without simultaneously listing them on the spot market has already appeared on other exchanges. However, it was not until the tenure of the new CEO that Binance began implementing this strategy to attract more traders who specialize in leveraged trading.
Binance remains an exchange, and in the context where Binance’s market share still declined in late 2023, it is obvious that enhancing trading features to attract users is a strategic move.
As shown below, starting in 2024, Binance began to intensify its launchpool projects followed by listing tokens on the exchange. This strategy aims both to retain users and to maintain the price of the exchange’s token, BNB.
However, not every launchpool event goes smoothly. For example, the most recent launchpool project, the 53rd one called Renzo (REZ), had a tumultuous announcement.
Furthermore, the token listings have also faced much criticism.
“Decommissioning” the stablecoin BUSD
BUSD is a joint creation of Binance and Paxos, first launched in 2019. At its peak, this token was among the top three strongest stablecoins in the market with a total supply exceeding 23 billion USD.
However, in February 2023, the New York Department of Financial Services ordered Paxos to stop issuing new and all related services for BUSD before Q1/2024, essentially “dooming” this stablecoin. On the same day, the SEC sued Paxos alleging that BUSD was an unregistered security.
From then on, BUSD gradually became invisible on the “stablecoin map.” By November, Binance announced the removal of the BUSD stablecoin effective from December 15, 2023.
Suspicions of insider information and trading
As reported by Tonraffles on the evening of February 5, 2024, after the RONIN coin from Ronin Network was listed on Binance, there was a lot of discussion about the continuous price drop of the coin, particularly suspicions of insider trading from prior knowledge of the listing time.
Immediately after Binance announced the listing, an account allegedly dumped $1 million of RONIN on OKX, causing the coin’s price to drop from about $3.5 to $2.7.
Previously, it was rumored that the Binance wallet had been accumulating 138 thousand RON since January 26, leading to speculation about an impending listing.
Ultimately, Binance co-founder Yi He had to speak out, announcing adjustments to the handling of listing information leaks. Specifically, Yi He stated that in the future, if the listing information of a coin is leaked, the listing of that coin would also be canceled.
Numerous new products launched
Another noticeable strategy is the launch of many new products and services. In just the past 6 months, Binance has launched:
Futures NEXT
Futures NEXT is a platform that predicts which tokens will be listed with USDT futures pairs on the exchange. This is a completely new product in the current exchange game. Previously, there were only prediction markets for certain major events, such as the US Presidential Elections on FTX.
Megadrop
Binance Megadrop is a new token release platform integrated with Binance Simple Earn and Binance Web3 Wallet, innovating the airdrop experience for users.
Users who register for BNB Locked Products and complete tasks in their Binance Web3 Wallet will get early access to top-tier Web3 projects, before the tokens from these projects are listed on the Binance exchange.
The first project supported on this platform is BounceBit (BB), the first BTC restaking solution.
- You want to see more: Binance’s Megadrop: A New Era of Token Launches Featuring Airdrops and Web3 Engagement”
Spot Copy Trading
Spot Copy Trading allows Binance users to copy and automatically execute trades from qualified professional traders (Pro Trader).
This feature will initially launch on Binance Web, then gradually be integrated into the Binance app. It is currently available in selected markets across Latin America, Europe, the Middle East, and Asia-Pacific. Initially, it will support over 100 Spot trading pairs, with more pairs to be added in the future.
Copy Trading is not a completely new concept for Binance. Previously, the exchange collaborated with Traderwagon, a third-party platform, to bring Copy Trading capabilities to its users. However, this was a partnership product, limited to certain users and not widely available to all customers.
Most recently, copy trading was introduced for Binance Futures in September 2023.
Binance Labs Separates from Binance, Operates Independently
In March, Bloomberg reported that Binance had quietly spun off its $10 billion venture capital and incubation arm, Binance Labs, earlier in the year.
Mr. Alex Odagiu, Investment Director of Binance Labs, stated that the fund has become an independent entity and severed some ties with Binance Group. Binance Labs employees now have separate contracts from those of the exchange, similar to the setup at BNB Chain – a blockchain platform backed by Binance.
Notably, Binance Labs is led by Yi He, a co-founder and the rumored actual power at Binance. Its venture capital activities are primarily funded by profits from the exchange and it is an active backer of early-stage cryptocurrency projects.
Binance Labs acts both as a venture investor and an incubator, managing programs focused on startups building on BNB Chain, such as the Incubation Program and MVB Accelerator Program.
Since its establishment, Binance Labs’ investment portfolio includes 250 projects across 25 countries, with a return on investment ratio of 14 times.
Binance Labs’ investments in Web3 have supported notable companies such as Optimism, LayerZero, Celestia, Aptos, Mysten Labs, Trust Wallet, etc. The assets of the fund are currently valued at over $10 billion in book value.
Tensions with the Nigerian Government
Legal issues continue to be a headache for the exchange. Having just reconciled with the US authorities, Binance now finds itself entangled with Nigeria.
In February 2024, the media reported that Nigeria had detained two Binance employees to aid in an investigation targeting the exchange. These staff members, who hold American and British citizenship, had their passports seized by the Nigerian Security Services.Nigeria is facing foreign reserve issues and is believed to be doing everything possible to limit outflows of money, including increasing taxes on foreign workers and more closely monitoring cryptocurrency transactions.
In March, Nigeria accused Binance of “indirectly” causing national losses, demanding the exchange provide user data and transaction histories.
Despite efforts to negotiate, they were unsuccessful, and the Nigerian government charged Binance with tax evasion and decided to prosecute the two detained employees.
The community continues to hold its breath and watch the unfolding events.
Barriers in Other Markets
Not only in the US and Nigeria, but Binance also faces difficulties in several other countries.
To grow its user base, the exchange implements a market penetration strategy by acquiring or merging with licensed local exchanges. However, it’s not always smooth sailing.
Russia
CommEX, an exchange suspected to be affiliated with Binance, announced it would cease operations just a few months after being acquired.
Hong Kong
HKVAEX, an exchange believed to be connected to Binance, announced it would permanently close as of May 1st.
South Korea
Binance is looking to reduce its stake in the exchange GOPAX due to regulatory concerns.
After being forced to leave this market, Binance acquired a majority stake in the cryptocurrency exchange GOPAX in February 2023 to create a compliant entity. However, this ultimately failed.
Philippines
Binance continues to face legal obstacles here. Last March, the SEC of the Philippines officially blocked access to Binance due to its lack of an operational license.
Currently, residents of the Philippines are unable to access the exchange. However, it is unclear what Binance’s next moves in this country will be.
India
Local newspapers report that Binance is willing to pay a $2 million fine to re-enter the Indian market.
In January, the Indian government blocked 9 cryptocurrency websites operating illegally and not complying with government regulations. Following this action, the Apple and Google app stores removed crypto exchange apps from the region.
Before the ban, Binance accounted for about 90% of the cryptocurrency trading volume of Indian investors, estimated at $4 billion. It’s understandable why the exchange wants to resume operations in this market.
First Time with a Board of Directors
Another surprising change is that for the first time in its 7-year history, Binance has established a Board of Directors.
The board currently consists of 4 members from Binance, including:
- CEO Richard Teng;
- Heina Chen – a powerful manager without a formal title, referred to as the “right hand” of former CEO CZ;
- Jinkai He and Lilai Wang – two other long-serving directors at the exchange.
The remaining three members are figures from outside Binance, including:
- Gabriel Abed – former Barbados ambassador to the UAE;
- Arnaud Ventura – manager of Gojo & Co.; and
- Xin Wang – CEO of Bayview Acquisition Corp.
Mr. Gabriel Abed has been appointed as the Chairman of the Board of Directors. Notably, Yi He, who is regarded as the current “brain” of the exchange, does not appear on the board.
Additionally, the exchange is also conducting a review of its American customers as required by regulators.
Conversion of SAFU Fund to USDC, Profit of an Additional $900 Million
Binance recently announced the conversion of all assets in the SAFU fund to USDC to ensure stability amid a volatile market.
According to transactions provided by Binance, the exchange transferred nearly $1 billion in Bitcoin and $722 million in BNB from storage addresses, then only redeposited $800 million in USDC back into the insurance fund address.
Therefore, it is evident that Binance has profited over $900 million by holding BTC and BNB in the SAFU fund since February 2022. The exchange did not specify what it will use the surplus funds for, only stating that it will continue to maintain the SAFU fund value at $1 billion.
