Binance: A History of the World's Largest Cryptocurrency Exchange

Binance was founded in July 2017 by Changpeng Zhao (CZ) and Yi He. The company raised approximately USD 15 million through an initial coin offering (ICO) for its BNB token to fund the launch of its cryptocurrency exchange. Binance initially operated out of China before relocating due to regulatory pressures.

Binance launched its native cryptocurrency, Binance Coin (BNB), during its ICO. BNB was initially an ERC-20 token on the Ethereum network designed to offer users discounted trading fees on the Binance exchange. BNB would later migrate to Binance's own blockchain and become one of the top cryptocurrencies by market capitalization.

By January 2018, Binance had become the largest cryptocurrency exchange in the world by market capitalization, reaching USD 1.3 billion. The exchange's rapid growth was driven by its wide selection of altcoins, low fees, and aggressive listing strategy, surpassing established competitors like Coinbase and Kraken.

Binance revealed it had been the victim of a large-scale security breach in which hackers stole 7,000 Bitcoin worth approximately USD 40 million. Binance halted all transactions for one week while investigating the incident and pledged to reimburse affected customers from its Secure Asset Fund for Users (SAFU), an emergency insurance fund.

Binance announced it would prohibit U.S. passport holders and residents from using its main platform and established a separate entity, Binance.US, to serve American customers in compliance with U.S. regulations. The move followed increasing regulatory scrutiny from U.S. authorities regarding unregistered operations.

Binance launched the Binance Smart Chain, a blockchain network that runs in parallel with Binance Chain, enabling smart contract functionality and DeFi applications. The chain offered compatibility with the Ethereum Virtual Machine (EVM) and low transaction fees, quickly becoming one of the most popular blockchain platforms for decentralized applications.

It was reported that Binance was under investigation by both the U.S. Internal Revenue Service (IRS) and the Department of Justice (DOJ) on allegations of money laundering and tax offenses. The investigations marked an escalation in U.S. regulatory scrutiny of the exchange's global operations.

The United Kingdom's Financial Conduct Authority (FCA) ordered Binance to stop all regulated activity in the country, stating that the exchange was not permitted to undertake any regulated activities in the U.K. The order triggered a wave of regulatory actions against Binance by authorities in Japan, Italy, Germany, and other countries.

A hacker exploited a cross-chain bridge on the BNB Chain, resulting in the theft of approximately USD 568 million in tokens. The attack targeted the BSC Token Hub, a bridge connecting BNB Beacon Chain to BNB Smart Chain. Binance validators paused the network to contain the damage and later recovered a portion of the stolen funds.

Binance pleaded guilty to multiple U.S. charges including violations of the Bank Secrecy Act, money laundering schemes, unlicensed money transmitting, and sanctions violations. As part of the plea deal, the company agreed to pay USD 4.3 billion in fines, and Changpeng Zhao stepped down as CEO with a personal USD 50 million fine. Richard Teng succeeded Zhao as CEO.

Following Changpeng Zhao's resignation as part of the DOJ settlement, Richard Teng, formerly Binance's global head of regional markets, was appointed as the new CEO. Teng faced the challenge of steering the world's largest cryptocurrency exchange through a new era of regulatory compliance and corporate governance.

U.S. President Donald Trump pardoned Changpeng Zhao, who had been convicted as part of Binance's 2023 settlement with the DOJ. White House press secretary Karoline Leavitt stated that Zhao had been the victim of persecution by the previous administration. The pardon allowed Zhao to resume business activities without legal restrictions.