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Binance Universe (Part 3): Binance’s Legal Battle And Its Future

With his familiar black hoodies, like a combination between Mark Zuckerberg and Steve Jobs - how has Changpeng Zhao (CZ) built his Binance universe? Explore this five-year journey of CZ with the three-part series by Coin98 Insights. Welcome to the third part.
Published Jun 02 2022
Updated Feb 23 2023
15 min read

To review the Binance's growth journey, do not forget to read:

2021 | Exploding stats

Highlighted figures

  • 2.14 billion transactions, with an ATH of 16.26 million daily transactions, recorded on Nov 25.
  • 123 million new wallet addresses, with an ATH of 2.27 million daily active wallets, recorded on Dec 1.
  • DeFi TVL reached $17 billion, and DEX transaction volume was > $300 billion.
  • 1,150+ projects on DeFi, GameFi, NFTs, Metaverse, and other network segments.
  • BNB Chain Accelerator Funds invested in 40+ projects. > 42,000 BNB was reimbursed in the BUIDL program.
  • Launched a $1 billion Growth Fund to accelerate, incubate and invest in blockchain mass adoption.
  • Launched a $200 million co-investment fund with Animoca Brands to invest in games on BNB Chain.
  • >17 million BNB staked on BNB Chain to support the network, with > 46,000 delegators sharing > 2 million BNB rewards.
  • >19,000 BNB burned through on-chain BEP95 burn.
  • >1,000 content creators on Binance NFT.
  • 2.5 million NFTs were traded on the Marketplace.
  • 1 million Mystery Boxes were sold, creating > $360 million in trading volume.
  • 60 gaming projects cooperated with Binance NFT Marketplace to conduct IGO and sold >1 million NFT gaming.
  • The most expensive gaming NFT was sold for almost $2 million (4,000 BNB).
  • Launched an educational blog about 23 NFT.
  • 20 NFT academic articles.
  • Launched fan tokens of 3 sports teams (LAZIO, PORTO, and SANTOS) on Binance Launchpad and Launchpool.
  • 30+ online and offline activities for the fan token community.

Highlighted events

January 2021

  • BNB Chain community introduced its vision and roadmap for the year.
  • Invested in blockchain gaming platform Seascape Network .
  • Launched ChainIDE on BNB Chain and released BEW v1.131.1.
  • Hosted Binance Hackathon on Gitcoin with a $60,000 reward.
  • Launched Binance Lite on Mobile App.

February 2021

  • 1 million wallet addresses on BNB Chain.
  • BNB Chain processed >1 million transactions within a day for the first time.
  • Launched the Most Valuable Builder (MVB) program designed to find the best projects and fuel their development, eventually attracting >310 projects.
  • BNB Chain held a Developer Masterclass and Hackathon in Africa to train 1,000 developers.

March 2021

  • The Graph, the indexing protocol for querying networks, supported BNB Chain.
  • BNB Chain Accelerator Fund distributed a record-breaking $3.25 million reward as part of the BUIDL Reward Program.
  • Invested in Multicoin Capital.
  • Launched Binance Pay function and Merchant Program, a free in-app payment transaction.

April 2021

  • BNB Chain Accelerator Fund invested $100 million in the DeFi platform Bondly.
  • The 1st BNB Chain Grant invested in 108 projects with > $780,000 in funding.
  • The decentralized lending protocol Venus hit $10 billion in TVL.
  • The 15th time BNB Burn hit a record with > $593 million in value.

May 2021

  • BNB Chain daily transactions exceeded 10 million for the first time.
  • MVB II, “The Big Bang of NFTs”, was launched.
  • Hosted Southeast Asia and Vietnam Hackathon.
  • Launched Binance NFT Marketplace.

June 2021

  • Binance NFT Marketplace announced its creators: Guti, Lil Yachty, Kyle.
  • “Featured by Binance”, the decentralized NFT exchange sponsored by Binance went mainnet.
  • BNB Chain launched the Martians Program to create a volunteers community to grow and improve the BNB Chain ecosystem.
  • Introduced the first edition of BNB Chain Learn & Earn with > $25,000 and NFTs in prizes.
  • BNB Chain hosted a series of “Security First in DeFi” sessions to educate ecosystem developers and users about security issues.
  • NFTs were trending on BNB Chain. BakerySwap led the NFT marketplace in BNB Chain with > 500,000 NFT transactions. Maye Musk NFTs and Mystery Box went live on BNB Chain.

July 2021

  • The MVB II program finished with 10 winners. MVB II projects brought 500,000+ active addresses and $16 billion in trading volume.
  • Announced the BNB Chain Project of the Year awards for projects in 6 different categories.
  • Hosted “Build to the Moon” concert with famous creators on Binance NFT.
  • BNB Chain community launched Priority One, a $10 million bounty program aiming to bolster the security of 100 BNB Chain projects.
  • GameFi started to heat up, fueled by the Play-to-earn trend. The number of daily transactions on the BNB Chain nearly reached the ATH in May due to the increase in game activities.
  • Launched Crypto Gift Cards.
  • BUSD reached $10 billion in market capitalization.

August 2021

  • Launched the MVB and MVBII Incubation Program.
  • TVL of Tranchess surpassed $1 billion.
  • Former US Federal Law Enforcement Investigator Greg Monahan joined Binance.
  • Strongly required users to KYC to protect themselves.
  • Launched a new P2P payment method for African countries.
  • Introduced Binance Tax Reporting Tool.

September 2021

  • Announced Monthly Stars of August and introduced MVB Mentor Committee.
  • BNB Chain’s Accelerator Fund invested in Decentral Games.
  • Introduced whitepaper about security and risk control on BNB Chain.

October 2021

  • Introduced Binance Fan Tokens.
  • Introduced LAZIO Fan Token, starting a launch series of fan tokens on BNB Chain.
  • BNB Chain launched the biggest crypto fund ever with $1 billion to attract 1 billion more people to crypto. MCDEX and Deri were one of the first projects receiving this fund.
  • BNB Chain surpassed 100 million wallet addresses.
  • BNB Chain participated in the Gitcoin DeFi and Cross-chain Hackathon.
  • Hosted GameFi Hackathon for Central and Eastern Europe.
  • Launched Objective Moon, the €100 million fund for developing crypto and blockchain in France.
  • BNB Chain Core team proposed BEP-95 with a real-time BNB burn mechanism.
  • Announced Monthly Stars of September.

November 2021

  • Binance Chain testnet underwent 'Galileo' update via a hard fork.
  • MVB III introduced the Voting Committee and selected the top 10 players.
  • ThetanArena, a multiplayer online battle arena (MOBA) game, started its first battle on BNB Chain.
  • Binance Labs launched Incubation Program season 3.

December 2021

  • Binance US allowed BEP20 withdrawals and deposits.
  • BNB Chain and Animoca Brands launched a $200 million Investment Program for blockchain games.
  • Chainlink Keepers was launched on BNB Chain Mainnet.
  • Updated requirements for VIP Tier.
  • Introduced BNB Auto-Burn.
  • BNB Chain ended the financial year with 2.14 billion transactions, 123 million new wallet addresses, 1,150 projects, and >$17 billion in DeFi TVL on the network.

Looking back on the journey

1. Booming stats

a. Booming

If 2020 was a steady year for Binance in which all its products fell into place, 2021 was a year of explosion.

Binance exchange maintained its leading position in the market, with a far higher 24-hour trading volume than other exchanges.

As a result, the BNB token rose from $37 earlier that year to ATH of $686 (+1,854%), and became the third-highest token in terms of market capitalization in the industry.

Although the market saw the rise of new exchanges such as FTX and in 2021, Binance remained the market leader in terms of total trading volume, with a 45 percent market share (according to Coingecko).

b. Market expansion

2021 also marked the expansion of Binance into new markets such as Africa, Europe, and North America.

In the meantime, the platform introduced new products such as the Binance Card and Binance Pay, which helped Binance make an impact globally.

Binance launched 23 key products along with multiple other financial ones and services to meet users’ needs from 2018 to 2020. In 2021, it’s Binance’s showtime to distribute these products globally.

Compared to last year, Binance only planned to launch 5 products in 2021. However, these key products demonstrated that the company still focused on R&D work to provide good services in line with market trends.

c. DeFi Era

Launched at the end of 2020, Binance Smart Chain (BSC) was expected to help Binance thrive in 2021. With various activities in 2021, BSC did not disappoint the community:

  • Launched the Most Valuable Builder (MVB) program, which ran for three seasons and attracted hundreds of projects.
  • BSC Growth Fund provided $1 billion for builders and projects on BSC.

As one of the first blockchains to compete with Ethereum, BSC had exploded in the first half of 2021, leading the market’s DeFi trend. BSC TVL increased from $125 million at the beginning of the year to more than $31 billion in May 2021.

The figure below demonstrates BSC's accomplishments in 2021.

This year also marked an increase in the number of projects on BSC, from 60 Dapps in 2020 to 1,150+.

However, in the second half of the year, the emergence of other competing Layer1 blockchains such as Solana, Terra, and Avalanche caused BSC to lose its breath in the race. The community now awaited true breakthroughs to get it back on track.

4. Catching up with the trend

In 2021, Binance launched the Binance NFT Marketplace, supporting NFT activities from content creators, KOLs, and major brands. It also held NFT auctions and exciting events such as the sale of Mystery Box.

The platform was the first CEX to launch an NFT Marketplace, bringing users into contact with the booming NFT trend. Also, Binance NFT supports multi-chains for low-fee NFT deposits and withdrawals.

After Binance, FTX and Coinbase also launched NFT Marketplace. Once again, Binance had demonstrated its role as a market trendsetter.

As a result, Binance NFT Marketplace achieved certain successes:

  • Engaged over 1,000 content creators.
  • 2.5 million NFTs in many different fields were traded, bought, and sold on the Marketplace.
  • The number of traders increased 9 times, the trading volume increased 30 times compared to the first month.
  • 1 million Mystery Boxes were sold, earning over $360 million in trading volume.
  • 60 gaming projects cooperated with Binance NFT Marketplace to do IGO and sold more than 1 million NFT gaming.
  • In short, NFT is a big and growing trend and can be applied in many fields, and is the pioneer in this field granting Binance with distinguished advantages.

2. Legal issues: From underground waves to fierce ones

Forbes published documents about Binance's "illegal" activities in the US in 2020 was just the beginning. In 2021, the US Department of Justice and the US Internal Revenue Service officially investigated the exchange's activities. The Commodity Futures Trading Commission (CFTC) also launched an investigation in Binance to see if it allowed Americans to engage in illegal trades.

Chainalysis (the company that specializes in investigating blockchain crimes, whose clients include US federal agencies) concluded that more criminal activities had flowed through Binance than any other crypto exchange in the last year.

Specifically, Chainalysis tracked $2.8 billion Bitcoin that was suspected of being transferred to trading platforms by bad actors in 2019. According to this company, about 27%, or $756 million, flew through Binance. Binance responded by stating that it followed all anti-money laundering regulations in the jurisdictions in which it operated and that it would work with partners such as Chainalysis to improve its systems.

To “shield” itself from US investigations, Binance hired a former Treasury official and top defense attorneys to represent it in legal cases. In March 2021, the company contacted former US Senator Max Baucus, a Democrat from Montana, for policy and government relations advice. Binance also chose Brian Brooks, a top banker who led the Office of the Comptroller of the Currency during the Trump administration, to be the CEO of Binance.US in May 2021.

2022 | Leading and going beyond limits

Highlighted figured 

  • Completed the quarterly BNB Auto-Burn with > 1.6 million BNB.
  • Binance Labs led a $12 million Series A+ investment in WOO Network.
  • Binance Labs led a $5.5 million Seed Round for Heroes of Mavia.
  • Binance Secure Asset Fund for Users (SAFU) was evaluated at $1 billion.
  • Donated $10 million to Ukraine’s humanitarian effort.
  • Binance Labs invested $1.5 million in GAMEE to help the gaming platform go mainstream.

Investments and partnerships in early 2022

  • Jan 15th: Binance Labs invested in Coin98 to develop DeFi in the BSC ecosystem.
  • Jan 11th: Became the official sponsor of the TotalEnergies Africa Cup of Nations (AFCON 2021).
  • Jan 18th: Binance Labs participated in the Private Round of SPACE.
  • Jan 27th: Binance Labs invested in Solv Protocol to develop financial NFTs in the crypto world.
  • Feb 10th: Partnered with YG Entertainment.
  • Feb 11th: Binance Labs invested in Automata Network.
  • Feb 17th: Binance Labs invested in Manta Network for Web3 privacy.
  • Feb 17th: Binance and Netmarble F&C signed an MoU for a strategic partnership to build a global P2E and NFT ecosystem.
  • Feb 18th: Binance Labs invested in Symbiosis Finance.
  • Feb 23rd: Partnered with SM Brand Marketing.
  • Mar 4th: Binance Labs invested in AlwaysGeeky Games, the creator of an NFT project and an enhanced blockchain free-to-play tactical RPG game.
  • Mar 17th: Launched the PancakeSwap mini Program, the first DeFi project on Binance to bring CeFi and DeFi together.
  • Mar 18th: Binance Labs led Seed Round for Ultiverse to expand metaverse services in the BNB chain ecosystem.

Highlighted events

January 2022

  • Introduced a fair and equal way to buy NFT through a registration mechanism.
  • Binance Labs backed the Oasis Ecosystem Fund to support the building of the project on the Oasis network.
  • Became the first blockchain and cryptocurrency organization to join the National Cyber-Forensics and Training Alliance (NCFTA).
  • Introduced Binance Code which facilitates quick crypto transfers and trades using secure codes.
  • Binance Chain and Binance Smart Chain became BNB Chain.
  • Introduced BSC NFT metadata standards.

February 2022

  • Invested $200 million in Forbes magazine.
  • Binance Futures celebrated the launch of its chatbot with epic rewards.
  • Introduced The New and Improved Spot Liquidity Provider Program.
  • Introduced BNB Chain which is the evolution of BSC.
  • Binance UK joined the UK’s Payments Innovation Forum as a Benefactor Member.

March 2022

  • Launched Payment technology company Bifinity.
  • Binance UK renewed UK Innovation Finance Membership as a Scaleup Innovator.
  • Binance was granted a license to provide crypto asset services by the Central Bank of Bahrain (CBB).
  • Binance was granted a Virtual Asset License by Dubai's Virtual Asset Regulatory Authority (VARA).

Looking back on the journey of the first quarter 

1. The rise of the BNB Chain

The second half of 2021 and the beginning of 2022 showed a slowdown from the BNB Chain ecosystem and the loss of market share taken by other Layer-1 blockchains such as Terra, Avalanche, and Solana…

To revitalize the ecosystem, the BNB Chain had undergone two major changes in its orientation and infrastructure:

  • Focused on MetaFi: This included NFT, GameFi, Metaverse, SocialFi, and others. Binance wanted to blockchainize large applications from Web2 to Web3 to bring billions of users from Web2 platforms to the Web3 world.
  • Renamed BSC to BNB Chain: BNB Chain aimed for becoming a multi-blockchain, as well as building more infrastructure to support highly scalable applications like GameFi, and SocialFi….

These were significant differences between BNB Chain compared to other Layer-1 blockchains, as it targeted web2 users, intending to reach 1 billion users.

2. Legal consolidation

Legal always plays a key part in the activities of any exchanges. At a time when cryptocurrency is gradually gaining popularity and going mainstream, exchanges are in the race to obtain necessary legal documents. In this period, crypto trading licenses can be an edge for crypto exchanges.

In Q1/2022, Binance had taken another step towards becoming a fully regulated and compliant exchange, obtaining two important licenses in two days:

  • March 15th: The license to provide crypto-asset services in the Kingdom of Bahrain.
  • March 16th: The Expert License granted by the Virtual Assets Authority of Dubai.

3. Investing in Forbes

After Forbes leaked the scandalous documents about Binance in 2020, the cryptocurrency exchange filed a lawsuit against the magazine for publishing a “false, misleading and highly defamatory” story. Binance claimed that the article caused them to lose millions of dollars.

However, what was interesting was that Binance dropped the lawsuit last year, and instead invested $200 million in Forbes in February 2022.

This transaction was viewed as an attempt to broaden public understanding of cryptocurrencies and blockchain.

“As Web 3 and blockchain technologies move forward and the crypto market comes of age we know that media is an essential element to build widespread consumer understanding and education. We look forward to bolstering Forbes’ Digital initiatives, as they evolve into a next-level investment insights platform,” said CZ.

According to the statement, two senior Binance executives, Patrick Hillmann (Chief Communications Officers) and Bill Chin (Head of Binance Labs Fund) will join the Forbes Board of Directors upon the successful closing of the business combination transaction.


Legal status

1. United States

In 2019, Binance was banned in the United States on regulatory grounds. In response, Binance and other investors opened Binance.US, a separate exchange registered with the United States Financial Crimes Enforcement Network and designed to comply with all applicable US laws.

The US variant has been praised for offering a very similar interface and feature set to its worldwide counterpart. However, it is banned in seven states. In May 2021, Bloomberg News reported that Binance was under investigation by the United States Department of Justice and the Internal Revenue Service for money laundering and tax evasion.

2. United Kingdom

In June 2021, Binance was ordered by the UK's Financial Conduct Authority to stop all regulated activity in the United Kingdom.

3. Japan

On June 25, 2021, Japan's Financial Services Agency warned Binance that it was not registered to do business in Japan. This was the second notice Binance received from the FSA. Previously, a similar warning was issued on March 23, 2018.

4. France

In May 2022, Binance gained regulatory approval in France, allowing the company to provide digital asset services in the country. France is the first European country to give Binance regulatory approval. 

5. Germany

In April 2021, the Federal Financial Supervisory Authority in Germany warned that the company risked fines for not releasing an investor prospectus for the stock tokens it has issued.

6. Thailand

Thailand's Securities and Exchange Commission filed a criminal complaint against Binance on July 2, 2021, for “a commission of an offense under the Emergency Decree on Digital Asset Business B.E. 2561 (2018)". Additionally, Thailand's SEC cited Binance for operating without a license, a violation of Section 26 of the Digital Asset Businesses Emergency Decree.

The Legal Future of Binance

It could be argued that Binance's future is dependent on whether it could reach an agreement with regulators around the world and find a suitable location for its headquarters. CZ stated that Binance is currently attempting to settle on a location, and an announcement about the headquarters would be coming “in a very short period.”

This was a significant shift from 2020 when CZ said that the company's headquarters was wherever he happened to be. In the legal filings, the company's lawyers said that Binance was registered in the Cayman Islands, which is well known as an offshore regulatory and tax haven.

Because of the uncertainty in Binance's operation location, regulators had found it difficult to establish jurisdiction over the company.

Their approach was, ‘We don’t need a regulator, we are decentralized,’” said Brendler, the DA Davidson analyst.That worked really well for growing and scaling and product innovations.”

This approach, however, might need to change as Binance seeks to raise funds from outside investors, who typically require some level of government oversight as an assurance that a company is legally sound.

“To raise capital, we believe that the company needs to show a path to settling on a global headquarters and consolidating operations,” said Robert Le, an analyst for Pitchbook.

Binance’s future forecast

Given the current situation, the following moves could be implemented by Binance shortly:

Actively promote brand awareness to help attract new users as the crypto market continues to grow. This can be seen in many of Binance’s previous activities, from supporting NFT to catching the hottest trends such as fan tokens and metaverse.

CEX's moves in recent times - Source Game of CEXes

It is no coincidence that Binance is the world's top CEX and has been holding that position for a long time. Binance has a diverse ecosystem, whose each component plays an important and complementary role. Surely, the ecosystem's products will continue to be updated and improved to keep up with market trends.

The previous birth of two chains, Binance Chain and Binance Smart Chain, demonstrated that Binance was very passionate about DeFi and would like to develop beyond its CEX. However, the two current chains had both lost their traction and would require new moves if Binance wants to continue to focus on this segment. Binance recently introduced the BNB Chain, which proves that BNB is still the ecosystem's blood. 

With the collaboration with Animoca Brands to launch a $200 million fund for GameFi projects, it appeared that Binance was able to choose one of its branches to focus on shortly.

Binance, as the world's largest CEX, might conduct an IPO in addition, to support the trading of assets other than cryptocurrency (stocks, commodities...) and expand its reach to traditional investors.

DeFi on BNB Chain was currently behind other blockchains. However, with the vast amount of liquidity Binance is possessing, the exchange has a significant advantage if it continues to focus on developing DeFi. When the products are mature and secure, Binance would be able to connect DeFi to its massive CEX liquidity. 

To review the Binance's growth journey, do not forget to read:

Authors: Bich Tram, Camila, Vi Dang, Duy Nguyen