When cryptocurrency exchange FTX collapsed, it should have been a boon for its rival Binance, but it only made things worse for the world\u2019s largest crypto exchange.<\/p>\n
The exchange \u2014 which reportedly employs over<\/a> 6,500 staff \u2014 has faced an onslaught of headwinds since November last year when its Chief Executive Officer Changpeng Zhao (CZ) sold<\/a> FTX\u2019s FTT tokens. That move triggered a surge in withdrawals from FTX, which in turn revealed<\/a> a shortfall on the rival exchange of over US$8 billion in customer funds.<\/p>\n But since then, all eyes have turned to Binance and CZ.<\/p>\n \u201cBinance is still the biggest exchange in the world, but it has faced a difficult year marred by regulatory enforcement actions, falling volumes, and a reputational hit,\u201d said Clara Medalie, research director at crypto data firm Kaiko.<\/p>\n Here\u2019s Forkast\u2019s guide to where things stand for Binance, almost a year after FTX\u2019s downfall. Binance did not respond to a request for an interview or provide commentary for this article.<\/p>\n Binance is everywhere and nowhere all at once. The global exchange sits within a Cayman Islands holding company<\/a> and has no formal headquarters \u2014 a structure that\u2019s helped Binance skirt global regulations over the years.<\/p>\n \u201cThe exchange has been known to be accessible to users in all countries around the world,\u201d said Robert Le, a crypto analyst at capital markets data platform Pitchbook. \u201cBinance.com has in the past provided instructions on how to access their services via VPN.\u201d<\/p>\n Binance is said<\/a> to operate in over 100 countries, but only lists 45 on its website. The rise of the cryptocurrency market, when Bitcoin hit<\/a> peaks of US$69,000, and its abrupt collapse put the spotlight back on the global operations of crypto exchanges as FTX\u2019s collapse heightened<\/a> regulators\u2019 concerns.\u00a0<\/p>\n The United Kingdom\u2019s Financial Conduct Authority (FCA) raised concerns about Binance\u2019s ambiguous corporate structure in 2021 leading to the financial regulator revoking<\/a> the exchange\u2019s U.K. permissions earlier this year. Last week, Binance attempted to reinstate<\/a> some local services with a new partner, but the FCA promptly intervened, asking<\/a> the partner to withdraw any existing approvals.\u00a0<\/p>\n Binance so<\/a>ld its Russian entity to the newly-launched exchange CommEx<\/a> amidst regulatory pressures and potential sanctions violations. Despite the ongoing divestment, Binance still lists Russia as an operational country on its website. Binance also closed<\/a> shop in Canada due to restrictions on stablecoin use while withdrawing from several European countries, like Germany, the Netherlands, and Austria due to registration issues. It also sought<\/a> deregistration in Cyprus, aiming to focus on fewer entities in Europe and comply with the European Union\u2019s Markets in Crypto Assets (MiCA)<\/a> regulation.\u00a0<\/p>\n Binance exited Belgium only to return<\/a> three months later. The exchange also reentered<\/a> Japan and cleared<\/a> the third stage of Dubai\u2019s four step licensing process. Binance is also dominant in Turkey, said <\/strong>Kaiko\u2019s <\/strong>Medalie.\u00a0<\/p>\n Using fiat pairs trading volumes as a proxy for trading activity, Binance appears dominant in several developing countries. It has 86% market dominance in Brazilian Real transactions, 69% in Nigerian Naira transactions, and 57% in Argentine Pesos transactions, said Jacob Joseph, a research analyst at digital asset data firm CCData.<\/p>\n Global regulators have been homing in on Binance since FTX\u2019s collapse. In February, the New York Department of Financial Services (NYDFS) ordered<\/a> Binance\u2019s stablecoin partner Paxos to stop minting Binance USD (BUSD). The loss of BUSD, the third largest stablecoin<\/a> in the market at the time, was a major blow to Binance.<\/p>\n Then the U.S. Commodity Futures Trading Commission (CFTC) charged<\/a> Binance, Zhao and the exchange\u2019s former chief compliance officer Samuel Lim with operating an illegal derivatives exchange and evading federal law. The CFTC action was quickly followed by the U.S. Securities and Exchange Commission (SEC), which filed<\/a> 13 charges against Binance and Zhao including operating an unregistered exchange and the unregistered sale of securities. Binance said it would vigorously defend<\/a> itself against the allegations.<\/p>\n The exchange is also reportedly facing a number of investigations including from the U.S. Department of Justice over potential violations<\/a> of Russian sanctions as well as a broader probe, according to Reuters<\/a>.\u00a0<\/p>\n In Australia, regulators have been investigating<\/a> Binance\u2019s former derivatives operations, while in France there\u2019s been an investigation into whether Binance carried<\/a> out adequate money laundering checks and illegally advertised to consumers. Most recently, a congressional committee in Brazil recommended<\/a> the indictment of Zhao and several other executives last week for running \u201ca financial pyramid scheme\u201d in the country.<\/p>\n Binance is not taking the accusations lightly, splashing the cash on lobbyists and law<\/a>yering up. In the first six months of this year, Binance spent more than US$1 million on lobbying in the U.S., almost as much as it spent on lobbying in all of 2022, according to data from OpenSecrets.<\/a>\u00a0<\/p>\n As Binance splurged on legal support, it made cuts within its organization. Binance.US eliminated<\/a> an unspecified number of jobs in June, while the broader company laid<\/a> off around 1,000 employees in July. A few months later, Binance.US cut<\/a> around a third of its workforce.\u00a0<\/p>\nWhere does and doesn\u2019t Binance operate?\u00a0<\/strong><\/h2>\n
Binance\u2019s legal battles<\/strong><\/h2>\n
Binance\u2019s revolving door<\/strong><\/h2>\n
High-profile departures<\/strong><\/h3>\n
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