Five years ago, you couldn\u2019t trade with fiat currency on Binance, yet the exchange was already garnering international attention with the highest trading volumes among its competitors.<\/p>\n
That\u2019s no mean feat in the cryptocurrency industry, even in 2018, with several well-established exchanges commanding established and loyal user bases. Critics questioned why the world needed another exchange, but Changpeng \u201cCZ\u201d Zhao would not be deterred.<\/p>\n
In June 2018, Cointelegraph had a one-on-one interview\u00a0with CZ to discuss the meteoric growth of the global exchange. At the time, Binance only supported crypto-to-crypto trading, but a 50% fee discount facilitated by its native BNB (BNB) token had been a major drawcard for savvy traders.<\/p>\n
Things are drastically different half a decade later. Binance has agreed to a $4.3 billion settlement with the United States government over civil regulatory enforcement actions against it. The U.S. civil case found that Binance\u2019s policies allowed criminals involved in illicit activities to move \u201cstolen funds\u201d through its platform. <\/p>\n
The judgment also led to Zhao\u2019s resignation as CEO due to personal charges against the Binance founder for violating the Bank Secrecy Act. Zhao pleaded guilty and has been released on a $175 million bail bond. <\/p>\n
Reflecting on that conversation in 2018, Zhao seemed acutely aware of the growing target on Binance\u2019s proverbial back as its trading volume outpaced competitors. <\/p>\n
Related: <\/em><\/strong>Binance $3.9B USDT move gains community attention amid DOJ settlement claims<\/em><\/strong><\/p>\n The exchange had been scrutinized over the integrity of its trading volumes, a point that Zhao challenged. He claimed that Binance accurately accounted for its trading volumes, while other exchanges \u201cdouble-reported\u201d on the buy and sell side of trades to give inflated figures to attract more users.<\/p>\n \u201cBeing number one creates other problems sometimes, especially with regulators. The regulators like to talk to the number one guy. We try very hard to not be number one all the time, but other people are trying very hard to boost their volumes to be number one.\u201d<\/p><\/blockquote>\n Scrutiny aside, Zhao\u2019s burgeoning exchange was gaining a head of steam. A modest $15 million initial coin offering (ICO) provided the basis to get Binance off the ground. <\/p>\n Zhao spoke fervently about the role the ICO played in laying the foundation for the exchange\u2019s growth. <\/p>\n \u201cThe ICO definitely helped us a lot. I cannot stress how much it has helped us. I think it\u2019s probably helped us on the order of 10 to 200x .\u201d <\/p><\/blockquote>\n The founder suggested that had Binance raised funds through conventional venture capital rounds, it would have grown considerably slower. Some 25,000 users signed up at the ICO phase, becoming \u201cinvestors, coin holders and users,\u201d Zhao explained. <\/p>\n By the time Zhao was forced to hand over the reins to incoming CEO Richard Teng, Binance\u2019s $15 million ICO had morphed into a company valued at $60 billion. <\/p>\n The outgoing CEO\u2019s words some five years ago have proved to be prophetic. Binance has faced regulatory scrutiny in numerous jurisdictions due to its aggressive expansion efforts. <\/p>\n This has come to a head in the U.S. with its major enforcement action and subsequent settlement. Binance has also faced more localized challenges in different countries and has exited countries like the Netherlands after failing to meet jurisdictional compliance. <\/p>\n The exchange has simultaneously found greener pastures, with the UAE providing a new base to continue operations. CZ is domiciled in the country and is expected to head back there before returning to the U.S. for sentencing sometime in 2024.<\/p>\n Poignantly, Coinbase CEO Brian Armstrong took to X (formerly Twitter) to highlight that his own exhange’s measured approach to meeting regulatory standards has avoided the current situation Binance finds itself in.<\/p>\n \u201cThis meant we couldn\u2019t always move as quickly as others. It\u2019s more difficult and expensive to take a compliant approach. You can\u2019t launch every product that customers want when it\u2019s illegal. But it\u2019s the right approach because we believe in the rule of law.\u201d\u00a0<\/p>\n Armstrong\u2019s take is indicative of the cryptocurrency space in general. Some push the boundaries while others take more cautious steps. This does not necessarily exempt the latter from scrutiny, though – Coinbase itself is still embroiled in it\u2019s own legal battle with the Securities and Exchange Commission over alleged securities violations. <\/p>\n