Binance is the world's largest cryptocurrency exchange by trading volume, founded in July 2017 by Changpeng Zhao -- widely known as CZ -- and Yi He. The platform rose from a startup funded by a $15 million initial coin offering to the dominant force in global cryptocurrency trading in less than a year. Binance's history is marked by extraordinary growth, aggressive expansion, jurisdictional evasion, and ultimately a landmark $4.3 billion settlement with the United States Department of Justice in 2023.
History
Founding and Rapid Rise
Changpeng Zhao, born in China in 1977, emigrated to Canada as a teenager and later graduated with a degree in computer science from McGill University. He worked as a software developer at Bloomberg and Tokyo-based Fusion Systems before entering the cryptocurrency industry in 2013. After serving as head of development at Blockchain.info and founding trading platform BijieTech, Zhao launched Binance in July 2017 through an ICO that raised approximately $15 million by selling 100 million BNB tokens at $0.15 each.
The platform distinguished itself through low trading fees, an aggressive coin listing strategy, and rapid feature deployment. Within eight months of launch, Binance had become the largest cryptocurrency exchange by daily trading volume. The exchange initially operated from China but relocated in response to the Chinese government's 2017 ban on cryptocurrency exchanges, moving operations first to Japan, then to Malta, and eventually adopting a deliberately decentralized corporate structure with no officially declared headquarters.
BNB and Ecosystem Expansion
Binance launched BNB (originally Binance Coin) as an ERC-20 token on Ethereum during its 2017 ICO. The token offered holders trading fee discounts and became the native currency of Binance's expanding ecosystem. In September 2020, Binance launched the Binance Smart Chain (later renamed BNB Chain), an EVM-compatible blockchain that attracted a large DeFi and NFT ecosystem due to its low transaction fees. BNB grew into one of the largest cryptocurrencies by market capitalization.
Legal Challenges and DOJ Settlement
In November 2023, Binance and Changpeng Zhao reached a historic settlement with the U.S. Department of Justice. Zhao personally pleaded guilty in Seattle to violating the Bank Secrecy Act by failing to maintain an effective anti-money laundering compliance program. Binance agreed to pay $4.3 billion in penalties -- one of the largest corporate settlements in U.S. history -- spanning the DOJ, FinCEN, OFAC, and the CFTC. The charges included facilitating transactions with sanctioned entities and failing to report suspicious activity.
As part of the agreement, Zhao stepped down as CEO and was replaced by Richard Teng, a former Abu Dhabi regulator who had been serving as Binance's regional markets head. Zhao was sentenced to four months in federal prison, which he served in 2024. He remains a significant shareholder in Binance but no longer holds an operational leadership role.
Bitcoin Involvement
Despite its multi-token approach, Binance has been the single largest venue for Bitcoin trading globally. The exchange offers spot BTC trading pairs, Bitcoin futures and options, leveraged products, and Bitcoin savings and staking programs. Binance's sheer volume has made it a dominant force in Bitcoin price discovery, though its influence has also raised concerns about market manipulation and the reliability of reported trading volumes.
The exchange has periodically offered zero-fee Bitcoin trading promotions to attract users, and its BTC reserves have been among the largest of any custodial entity. Binance's proof of reserves system, introduced after the collapse of FTX in late 2022, has been an industry reference point for exchange transparency -- though it has also faced scrutiny over its methodology.
Significance
Binance represents both the enormous potential and the systemic risks of unregulated growth in the cryptocurrency industry. Its rise demonstrated that a well-executed exchange platform could capture global market share at unprecedented speed. At the same time, its legal troubles illustrate the consequences of operating outside regulatory frameworks. The DOJ settlement marked a turning point not only for Binance but for the broader cryptocurrency exchange industry, establishing that even the largest platforms are subject to national regulatory authority.
External Links
- Binance Official Website
- Binance on Wikipedia
- Changpeng Zhao on Wikipedia
- DOJ Press Release on Binance Settlement
References
- Bitcoin Core -- the network underlying the Bitcoin trading on Binance
- Digital Gold -- covers the early exchange ecosystem that preceded Binance
- Xapo -- represents the contrasting compliance-first model
- Bitstamp -- early regulated exchange that took a different approach to growth
- Lightning Network -- Layer 2 network Binance has integrated for Bitcoin withdrawals