Despite an ongoing US Department of Justice (DoJ) investigation and warnings by worldwide regulators, workers at crypto exchange Binance reckon the company is worth $300 billion.
That valuation is from unnamed sources speaking to Wall Street Journal reporters.
If that’s true and Binance shares were listed on a stock exchange, the firm would be the world’s 25th largest public company, on par with Disney, Netflix, and Adobe.
For scale, the market currently values top US crypto exchange Coinbase at $74 billion.
Changpeng Zhao, who is Chinese-Canadian, founded Binance in 2017 with capital made in China working at OKCoin, networking in Hong Kong, and his $15 million Binance Coin initial coin offering (which was totally never marketed to US residents, sarcasm intended).
Since then, Binance has successfully leveraged its seed funding to become the most popular digital asset exchange in the world.
The company now has 3,000 employees scattered across the globe and claims to process more than $30 billion in daily spot crypto volume, plus $78 billion in daily derivatives trades.
All told, Binance typically reports more than $100 billion in daily trading volume at the moment, which works out to be a truly gargantuan $36 trillion annualized.
But as with all dubious information reported by centralized exchanges, we may never know the real numbers.
Since China’s recent crypto ban and encroachment into Hong Kong, Zhao has unsurprisingly withheld all information about his new office locations, including the location of Binance’s past headquarters.
He claims employees now work from home with no centralized office; a marketing ploy trendy with large crypto companies.
Zhao has reportedly resided in Singapore for most of the past two years.
Binance the focus of multiple investigations
Binance’s US-centric subsidiary maintains several state-level licenses in the US.
Still, the US Securities and Exchange Commission (SEC) has requested information on Binance.US’ hierarchy and relationships to the global organization, according to one company executive (via WSJ).
The DoJ and Internal Revenue Service (IRS) are also investigating whether Binance might have enabled money laundering. The Commodities and Futures Trading Commission is looking into claims of insider trading.
International actions include India’s probe of Binance’s WazirX (Binance acquired WazirX in 2019) as part of a probe into Chinese-based betting apps. Indian investigators say that users may have used the WazirX exchange to launder money.
And according to the central bank of the Netherlands, “Binance is not in compliance with the Anti-Money Laundering and Anti-Terrorist Financing Act and is illegally offering services for the exchange between virtual and fiduciary currencies, and it is illegally offering custodian wallets.”
Binance also received warnings from the UK’s Financial Conduct Authority, the Ontario Securities Commission, the Securities and Exchange Commission of Thailand, Germany’s BaFin, the Central Bank of Nigeria, Poland, South Africa, Cayman Islands, and many others.
Zhao had previously labelled regulatory frameworks “obsolete,” but now acknowledges that obtaining regulatory permission is necessary.
The exchange is now implementing additional user identity checks to combat money laundering.
Zhao versus the execs
In May 2021, Binance.US hired Brian Brooks as chief exec. Brooks previously served as the acting head of the US Office of the Comptroller of the Currency as well as Binance’s rival exchange, Coinbase.
Brooks and Zhao clashed over matters like onboarding US investors, the process of appointing new board members, and the location of Binance’s data storage.
Brooks resigned in early August Several members of Binance.US’ legal and compliance departments also quit.
Binance.US has since denied that any of the company’s data or technology is in China. It says it stores all US user data on Amazon Web Services servers in Virginia.
In the face of all these problems, Binance consistently ranks first on CoinMarketCap’s (another subsidiary) list of top exchanges by trading volumes.
With few competitors, Binance dominates in countries with less-developed financial infrastructure like South Africa and India (the latter via WazirX).
Company executives based their $300 billion estimated valuation detailed in WSJ’s report on the fees collected from the exchange’s enormous trading volumes.
Notably, Zhao has not directly reacted to the Wall Street Journal’s $300 billion figure. However, he did mention that the valuation of a tech company can often depend on estimates of its capacity for growth.
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