Changpeng Zhao and the Rise of Binance

Zhao Changpeng, whose English name is CZ, was born in an ordinary family in Jiangsu. Both his parents are teachers, and his father is a professor. Shortly after he was born, his father was labeled a "bourgeois senior intellectual" and was demoted for a period of time.

In the late 1980s, 12-year-old Zhao Changpeng immigrated to Vancouver, Canada with his parents. In his words, he is a typical "world citizen". He lives in a different city every five years on average. He has lived in mainland China, Canada, Japan, Hong Kong Special Administrative Region of China, and Singapore. Unlike most rich second-generation immigrants, Zhao Changpeng started working to support his family when he was a teenager. He worked as a clerk at McDonald's and worked all night at a gas station... ...

When he was in college, Zhao Changpeng chose to study computer science at McGill University in Montreal, which started his programming career. After studying computer science at McGill University in Montreal, Zhao Changpeng went to Tokyo and New York.

Initially, he developed a system for matching trade orders for the Tokyo Stock Exchange, and then developed futures trading software at Bloomberg Tradebook. At the age of 27, he had received three promotions in two years and was responsible for managing a large technical team in New Jersey, London and Tokyo.

In 2005, Zhao Changpeng quit his job and moved to Shanghai to establish Fuxun Information Technology Co., Ltd. to develop high-frequency trading systems for securities companies.

In 2013, Zhao Changpeng learned about BTC from a poker friend (Bobby Lee) who was also an investor. Bobby Lee said to Zhao Changpeng, "Hey, Changpeng, if you invest 10% of your net worth in Bitcoin, if it rises 10 times, your wealth will double. Even if it doesn't, you've only lost 10%."

Subsequently, Zhao Changpeng began to get involved in cryptocurrency projects and joined Blockchain.info as the third founding employee, where he worked for eight months and had frequent contact with Bitcoin evangelists Roger Ver and Ben Reeves.

In June 2014, at the invitation of He Yi, he became the CTO of OKCoin. He sold his house in Shanghai and invested all of it in Bitcoin. His only hobby is mobile phones (he owns 3 mobile phones), he does not have any cars, yachts or watches, and he is the first person to hold 99% of his assets in cryptocurrency.

At the time, Zhao Changpeng had a very high opinion of OKCoin, but a year later, he chose to leave OKCoin. Regarding this experience, Zhao Changpeng recalled: "OKCoin encountered some cultural and value conflicts, and I didn't want to be involved, so I left in 2015."

In May 2015, Zhao Changpeng left OKCoin due to disagreements with Xu Mingxing.

Thanks to his work experience at OKCoin, Zhao Changpeng understood the logic of the entire cryptocurrency exchange and the entire industry, and began to consider opening a company that does not involve cash and specializes in digital asset transactions. His former colleague Ver believes that not having any relationship with financial institutions can reduce risks and avoid regulation.

On June 24, 2017, Zhao Changpeng started to create Binance and began to raise funds for the Binance Coin ICO. The total amount of BNB is 200 million, of which 100 million is used for ICO, 80 million is held by the team, and the BNB held will be locked and released year by year, and the last 20 million is held by angel investors.

On July 2, Binance raised a total of $15 million worth of crypto assets through ICO.

On July 14, 2017, Binance website was launched and BNB was officially listed for trading.

On August 8, He Yi suddenly announced on Weibo that he was leaving Yixia Technology, where he had worked for 1 year and 8 months, and joining his old friend Zhao Changpeng's company, Binance, as CMO, co-founder and director.

Like many startups, Binance, which had just started, encountered bottlenecks in its growth: low visibility, small business volume and other problems. The lowest price of BNB on the day of its launch was 0.0001 BTC. At that time, the price of BTC was US$2347.31, and the lowest price of 1 BNB was about US$0.23.

On August 22, Binance and TRON conducted a rush sale for a total of 500 million TRON coins (TRX), and all shares were sold out within 53 seconds. The potential of TRON as the first ICO project in the second half of 2017 has begun to emerge.

On September 4, seven Chinese ministries jointly issued the "Announcement on Preventing the Risks of Token Issuance and Financing", guiding local governments to clean up and rectify virtual currency trading venues and ICO activities under the framework of the special rectification work on Internet financial risks.

On September 15, national regulators ordered the closure of all call auction transactions for virtual currencies to be exchanged for RMB. The intensity of the regulation of cryptocurrencies by this "September 4th Ban" is unprecedented.

The ban led to a major reshuffle of Chinese exchanges, and mainstream trading platforms began to avoid policy risks. Bitcoin China closed the new user registration channel in the middle of the month and announced the closure of cryptocurrency trading business at the end of the month. It was later acquired by a Hong Kong blockchain investment fund. Subsequently, cryptocurrency trading platforms such as Jubi.com, Huobi.com, and OKcoin were also shut down.

After the ban was issued, users were most concerned about "Which exchange is the safest?" "How to determine security? The first condition is to check whether its server is still in the country, that is, within the scope of government control." If the server's IP is in the country, it will not be considered.

An investor checked and compared the three major exchanges and found that OKcoin's domestic and international servers are all located in China; while the earliest announcement from Huobi's global professional website Huobi.Pro was not published until a month later, on October 17, 2017, showing that Huobi's headquarters is located in Singapore, and its servers and registered place are in another small country.

Only Binance was least affected by this regulation because it initially pursued an international strategy and promoted currency-to-currency trading. According to the announcement on September 5, 82% of Binance’s users are from overseas, and a large number of Huobi and OKCoin users have moved to Binance.

In September of the same year, Binance and Sequoia signed a letter of intent for investment. At that time, the two parties agreed that Binance's valuation was 500 million yuan, and agreed on a six-month exclusive clause in the agreement, that is, Binance was not allowed to discuss investment matters with other investment institutions within six months.

Binance's booming development attracted the attention of another top investment institution, IDG, which made two rounds of valuation offers of US$400 million and US$1 billion respectively.

On December 14, Binance proposed a new valuation offer to Sequoia. However, the two parties did not reach an agreement, and Binance also informed Sequoia that IDG would sign a share subscription agreement (SPA) in the next two days.

Sequoia filed a lawsuit against Binance. Facing Sequoia Capital, the industry's top investment institution, Zhao Changpeng did not back down: "I think the right to speak now should be in the hands of entrepreneurs. Good projects and good teams will never lack money." In the end, Zhao Changpeng not only did not take Sequoia's investment, he even did not take IDG's investment.

On December 8, Binance announced that its registered users exceeded 1 million.

On January 10, 2018, Binance announced that it had more than 5 million registered users worldwide. Binance users are mainly from Europe and the United States, and Chinese users account for less than 4% of its users, which is far lower than that of Japan, South Korea and other countries in Asia.

According to a report by Daily News in January, Coinbase (one of the world’s most visited digital exchanges) has 100,000 new users signing up every day, Kraken (the largest Bitcoin exchange in Euros) has 50,000 new users signing up every day, and Binance is accepting 250,000 new users every day.

In February, Binance announced that it had more than 7 million registered users worldwide, making it one of the world’s largest trading platforms.

On February 8, Zhao Changpeng appeared on the cover of Forbes magazine. With a net worth of US$1.1-2 billion, he ranked third on the rich list. The list also included Ethereum founder Vitalik Buterin and EOS founder BM.

On March 23, the Japan Financial Services Agency (JFSA) issued a warning document to Binance, stating that Binance's behavior of conducting cryptocurrency trading business without registration violated relevant legal provisions, and if it did not stop trading, it would file criminal charges with the police.

On March 26, 2018, Binance moved its headquarters to Malta and established an office.

In April, the Hong Kong court held a hearing and ultimately ruled that Sequoia Capital’s application for an injunction was rejected because of its improper method of obtaining information and suspected abuse of procedures.

On April 26, Binance reached a cooperation with Uganda to make a series of investments in the local area.

On May 31, Binance established Binance Labs (Research Institute + Incubator + Ecological Fund).

On June 11, Binance signed a memorandum of cooperation with Digital Jersey, the Economic and Industrial Association of the British territory of Jersey, and Binance will open a compliance center and exchange in the local area.

On June 29, Binance Uganda was officially launched, marking the beginning of Binance’s trial of fiat currency trading.

On July 14, Binance established the Binance Investor Protection Fund SAFU.

On August 1, Binance announced its first acquisition project, Trust Wallet.

Zhao Changpeng said he was only interested in venture capital firms that could help Binance reach a partnership with regulators and obtain an operating license.

On October 23, Vertex Ventures network, a wholly-owned subsidiary of Singapore's Temasek, announced a strategic investment in Binance and will jointly establish Binance Singapore to expand its development in Singapore.

Binance's rise has been noticed by all the first-tier VCs. In September 2017, it received tens of millions of dollars in angel round investment from PanCity Capital and Black Hole Capital. During its contact with Sequoia (early August), the price of BNB was about 0.00004 BTC, and the price of BTC was $3,500 at the time, which means that 1 BNB was about $0.14.

When Binance contacted IDG, the price of BNB was 0.00016 BTC. At that time, the price of BTC was US$16,500, which means that the price of BNB was US$2.64. Roughly estimated, the valuation of BNB at that time was US$540 million.

On January 13, 2019, BNB fell to a low of $5.37, while Bitcoin was $3,441.30 at the time. Bitcoin had fallen 82.62% from its highest point.

On January 28, Binance released an announcement announcing the restart of Launchpad and the launch of the BitTorrent (BTT) sales project. BTT can only be purchased with BNB and TRX. This move kicked off the exchange's IEO.

BTT soared 10 times, and the first batch of buyers with a keen sense of smell and strong action made a fortune. Investors who were late to the party also began to hoard BNB and wait for the second phase of the project. Some people began to hire students to book Internet cafes to buy BTT, some people sold scripts, software, and KYC, and all kinds of insider information spread like wildfire. The currency circle was very lively.

On January 31, Binance announced a partnership with Israeli payment company Simplex, allowing Binance users to use Visa and Master Card credit cards to purchase cryptocurrencies such as Bitcoin and Ethereum.

On February 20, Binance launched the decentralized exchange Binance DEX and the Binance Chain testnet.

On March 20, Binance announced the launch of the "BinanceLite Australia" fiat currency trading platform in Australia, which can provide Australian users with cash-to-Bitcoin services through more than 1,300 service stations in Australia.

On April 4, Changpeng Zhao announced that the Singapore trading platform (Binance Singapore) will be launched at the end of April.

On April 20, BNB broke through its historical high price: US$25.4973 (about RMB 171).

On April 23, Binance Chain's decentralized trading platform Binance DEX was officially launched, and BNB is the native asset of Binance Chain.

Binance was founded less than two years ago, and its platform currency has risen from $0.23 to $25.4947. BNB has risen about 110 times, while Bitcoin has fallen about 70% from its peak. Binance's trading volume and profit are only the tip of the iceberg of Binance's strength. BNB is Binance's real assets.

On April 23, according to data from the Coinmarketcap website, Binance's 24-hour trading volume was 7.567 billion yuan, ranking first in the world.

Before Binance was born, there was no exchange to build an ecosystem, and trading was everything. When Binance launched BNB, not many people were optimistic about it, but when the price of BNB soared to $25 within three months, other exchanges followed suit.

From creating Binance Labs to setting up blockchain knowledge dissemination platforms Binance Academy and Binance Info, Binance has also established strategic partnerships and mergers and acquisitions with some partners, such as acquiring Trust Wallet as Binance's official wallet and investing in TravelbyBit to support BNB payments at airports around the world. In this way, Binance's ecosystem has been gradually established.

Binance’s restart of Launchpad ignited a fire. Just like platform coins, when Binance’s demonstration effect came into being, other exchanges followed suit. However, people are usually blinded by the short-term wealth effect, and the real world is beneath the iceberg.

On May 7, more than 7,000 bitcoins were stolen from Binance's hot wallet address by hackers. The official announcement stated that the hacker suspected that the hacker obtained a large amount of API interface keys and 2FA verification-related information, and transferred all the bitcoins in dozens of accounts open for withdrawal to addresses controlled by hackers.

To this end, Binance announced that it would suspend withdrawals for one week to investigate security risks in its internal systems. At the same time, it will use SAFU to take full responsibility for user losses.

On September 2, Binance announced the acquisition of contract trading platform JEX.

On September 13, Binance opened the contract function and officially entered the derivatives trading field.

On October 15, Binance Futures trading leverage increased to 125x.

On November 21, Binance acquired the Indian digital asset platform WazirX, providing a fiat currency trading channel for the Indian rupee.

On December 2, Binance acquired DappReview, and the decentralized application (DeFi) information analysis platform became part of the Binance ecosystem.

On December 26, Binance invested in cryptocurrency derivatives trading platform FTX.

Prior to the establishment of Binance Futures, the business was dominated by derivatives trading platform BitMex, which once had a market share of over 50%.

By 2020, the open interest and liquidity of the crypto asset market have increased significantly, and the derivatives market has become a battleground for exchanges. If 2019 was just the first year of contracts, then in 2020, practitioners in the entire crypto market are either opening contract exchanges or helping others open contract exchanges.

Binance is the first mainstream exchange to launch features such as 125x leverage and smart liquidation system. It has also launched a mixed margin function (first introduced by FTX), as well as support for BUSD and BTC as margin to play contracts, multiple contract trading pairs, and risk margin waiting.

"Binance Futures is listing coins too quickly. For most of this year, there was no market for mainstream coins, and Binance basically captured all the dividends of DeFi," said a Binance contract user.

On February 17, Binance announced the launch of open platforms such as cloud services to provide technical and liquidity support to customers who want to establish blockchain technology-related platforms.

On April 27, Binance Pool was launched, providing miners with one-stop services such as coin deposit and financial management, coin-to-coin trading, OTC trading, mortgage lending, etc. on the basis of mining.

Binance Cloud is a new exchange built from scratch with the help of Binance's technology and experience and access to Binance's liquidity. Binance Cloud charges a certain fee every year and shares profits with the exchange in the future. Zhao Changpeng said that in the next five years, Binance Cloud will replace Binance blockchain asset trading platform and become the largest source of revenue.

The open platform launched by Binance has two main cooperation models: Binance Cloud and brokers. People pay too much attention to Binance Cloud, but underestimate the broker business. Jason, a trader engaged in US stocks and cryptocurrencies, said that the broker business has more room for imagination than a series of cloud system services such as Binance Cloud.

On May 27, Coinbase announced the acquisition of cryptocurrency broker Tagomi for between $70 million and $100 million. Tagomi was launched in December 2018, and its main business is to provide brokerage services for BTC, ETH and other crypto assets to institutional investors. Coinbase chose acquisitions to break through the brokerage business, while Binance chose to operate its own business.

On August 20, Binance Futures announced the launch of the DeFi Composite Index Perpetual Contract, using USDT as the pricing currency, including 9 indexes including LINK, COMP, LEND, etc.

On September 1, the Binance Smart Chain mainnet was officially launched.

With the rise of newcomer Uniswap and the popularity of automated market makers (AMMs), a new generation of DEXs and their liquidity providers are shaking up the foundations of centralized exchanges. Binance places smart contracts and DEX transactions on two parallel public chains, BSC and BC, respectively. Users can develop Dapps on BSC and benefit from the high-speed transactions of Dex.

On October 1, BitMEX CTO Samuel Reed was arrested in Massachusetts.

On October 18, Hong Kong-listed company OKEx issued an announcement stating that Xu Mingxing is currently under investigation by Chinese public security authorities, and its controlling shareholder and non-executive director Xu Mingxing is under police investigation and is currently out of contact.

BitMEX was sued and its CTO was arrested; a black swan appeared on OKEx; Binance once again became the biggest winner, with both overseas and domestic users flocking to it," said an exchange practitioner.

According to data from Beijing Lian'an, after OKEx resumed withdrawals, Binance's daily Bitcoin inflow once approached 30,000 BTC, making it the biggest beneficiary of various black swan events in the recent exchange.

On November 24, according to Coinmarketcap data, the 24-hour spot trading volume of the Binance trading platform exceeded US$32.1 billion, an increase of 31% from the previous day, setting a record high for single-day trading volume.

On the same day, Binance Futures’ daily trading volume hit a new high, exceeding 27.4 billion US dollars, ranking first in terms of open interest.

Binance has reached its peak in 2020. Both spot and derivatives are ranked first in the world, and the price of BNB has repeatedly hit new highs this year.

On December 4, Zhao Changpeng was selected into Bloomberg's 2020 list of the world's 50 most influential people, becoming the first person in the crypto world. Also selected in this list were Meituan founder Wang Xing and Fauci, director of the National Institute of Allergy and Infectious Diseases.

Zhao Changpeng told Bloomberg that he expects Binance’s profits to increase to between $800 million and $1 billion this year, up from $570 million in 2019.

When we talk about Binance, its concept has already gone beyond the scope of an exchange.

It started out by relying on spot coin-to-coin trading in July 2017 and became the industry leader in 3 months; it launched contract trading in September 2019, and ranked first in the industry in terms of trading volume half a year later; it launched Binance Pool in April 2020, and has now surpassed the established Ant Pool and ranked top three in the industry.

In addition, Binance also includes stablecoin BUSD, Binance Chain, Binance Smart Chain, decentralized exchanges, wallets, CoinMarketCap, DappReview, Binance Research Institute, etc.

"I like to wear the hoodie with the Binance logo printed on it that Binance gave me when I go shopping. It feels cool," said an investor on Binance.

Perhaps He Yi’s mantra speaks out Binance’s greatest core competitiveness: “Binance is not starting a business, Binance is making history.”