Binance's 2022: Compliance and transparency, continuous construction of Web3
The ups and downs are probably the common imprint of everyone in 2022.
There is a war between Russia and Ukraine outside, the international situation changes suddenly, and the global central bank raises interest rates to curb inflation; internally, the encryption market continues to decline, and encryption companies such as Celsius, Three Arrows Capital, and FTX have gone bankrupt one after another, which has caused unfavorable public opinion and stricter regulations. Supervision.
Although the development of the encryption industry has suffered setbacks in the past year, Binance has stood up in the predicament and helped the building to collapse.
On the one hand, Binance established an industry recovery fund to support encryption companies on the verge of bankruptcy and continue to build Web3. On the other hand, always insisting on the supremacy of user interests, put forward six key principles of encrypted asset ecology, and promoted the development of centralized platform transparency through a series of actions to rebuild user confidence: proactively disclose hot and cold wallet addresses, and introduce Merck-based Ershu's reserve proof mechanism (this measure has become an industry paradigm).
In addition, Binance has always adhered to the compliance route. As of the end of 2022, Binance has obtained operating licenses and registrations in 14 countries or regions on five continents, and the compliance team has also expanded from 500 to 750 people.
“No matter what the story will be in the coming 2023, we are ready. Binance has an excellent, diversified professional team with a mission, a management team composed of management experts, and sufficient capital reserves For the future, Changpeng Zhao (CZ), the founder of Binance, who is full of ambitions, said that he will continue to cultivate in the encryption industry.
1. Customer first, keep transparent
In mid-November, when FTX Group, Alameda and more than 130 affiliates filed for bankruptcy in the United States, a hurricane swept through the entire encryption market: institutions and users whose assets could not be withdrawn could only passively accept the reality, and multiple FTX-related encryption Enterprises and well-known projects have encountered liquidity crises and are on the verge of bankruptcy. Fear and despair pervade the entire Crypto world.
CZ knew that he had to take action to restore confidence in the encrypted finance that was about to fall into the abyss. The public opinion at this time was not friendly to him, thinking that he destroyed FTX, and words such as "executor" and "culprit" frequently appeared on his social media. In fact, when the bubble is popped, people always blame the first person to pop it, similar to other experiences in the long history. But CZ didn't worry about it for a long time, instead he stood up at the first moment of the crisis.
On November 15, Binance released "Six Commitments of a Secure Centralized Exchange". CZ proposed six key principles of the encrypted asset ecology, and called on all centralized exchanges to follow to rebuild user trust. "As a centralized trading platform, our first priority is to "protect users". Users' funds must not be mismanaged, and all measures must be taken to ensure the safety of users' funds. ” said CZ.
Specifically, the six principles include: (1) Risk-averse means should be adopted for user assets, and user funds must not be used for trading or investment; (2) Do not use the exchange's own native tokens as collateral (FTX collateral FTT and SOL series account for more than 70% of the products); (3) share instant asset certificates; (4) maintain a strong security reserve; (5) avoid excessive leverage, it is unwise to borrow for rapid growth and burn money , calling on industry partners to adopt the same conservative attitude financially; (6) Continuously improve security protocols and formulate strict KYC and AML (anti-money laundering) measures.
In order to promote the development of transparency on centralized platforms, Binance has set an example in fulfilling the above requirements. Take "sharing real-time asset certificates" as an example. Binance took the lead in disclosing the addresses of cold and hot wallets on the platform for users to view. According to Nansen data, Binance initially announced that the total asset reserves of wallet addresses exceeded 65 billion US dollars; even the wave of user withdrawals in December did not have a serious impact on it, and Binance still has 55 billion US dollars in asset reserves. More importantly, more than half of Binance’s reserves are stablecoins, and the sum of BTC, ETH, and various stablecoin assets accounts for nearly 80%. It is also one of the healthiest reserves among all mainstream CEXs.
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(Binance Reserve Proof)
In the past few months, Binance has announced reserve certificates twice, all assets are 100% asset-backed, and Binance promises to publish reserve certificates every month. More importantly, Binance is also constantly striving to expand more currency verification, from the first phase of BTC to now covering a total of 9 assets including BTC, ETH, BNB, LTC, USDC, USDT, XRP, BUSD, and LINK. At present, other platforms only cover three assets: BTC, ETH, and USDT. From this point of view, Binance has undoubtedly done a better job in terms of transparency.
In addition, compared to some platforms that are difficult to parry when encountering extreme emergencies, Binance’s ability to resist risks has been significantly strengthened, and the investor protection fund (SAFU) is its source of confidence. As early as 2018, Binance established SAFU to protect the interests of investors in response to the loss of user assets caused by extreme conditions or security issues. As of November 2022, the total value of SAFU funds will reach USD 1 billion. “We promise to Binance users and the crypto-asset ecological community that the SAFU fund will always remain at a considerable size. We will continue to fulfill this promise and continue to build the industry.”
2. The road to compliance has a long way to go
With the series of black swan events such as Celsius, Three Arrows Capital, and FTX, users and regulators have lost confidence in the industry, and mainstream public opinion has also moved in a direction that is unfavorable to encrypted finance, which has also triggered stricter regulation. U.S. Treasury Secretary Yellen called on the government to strengthen the supervision of cryptocurrencies, saying that the FTX bankruptcy is an objective lesson, indicating that the industry needs to strengthen supervision; after the FTX bankruptcy incident, the SEC also strengthened relevant warnings, saying that many cryptocurrencies can be defined as "Securities Assets".
It is conceivable that since then, the difficulty for encryption companies, especially encryption trading platforms, to obtain encryption licenses in countries around the world has increased exponentially.
For Binance, compliance has been imprinted in its blood since its birth. In the past few years, Binance has continued to implement its compliance strategy and has continued to obtain encryption licenses in many countries and regions around the world. In the past 2022, Binance's core strategy is to promote compliance globally.
In the first half of last year alone, Binance successively obtained Bahrain’s Type IV license, Dubai’s fully regulated virtual asset (VA) trading platform license, Abu Dhabi Global Market’s approval-in-principle, and France and Italy’s approved registrations. license.
By the end of 2022, Binance has registered licenses or licenses in 14 countries or regions on five continents, including Colombia, Abu Dhabi, Bahrain, Dubai, South Africa, France, Italy, Spain, Poland, Lithuania, Cyprus , Kazakhstan, Australia and New Zealand. In addition, Binance has worked hard to expand the compliance team to recruit professionals, and the compliance team has also expanded from 500 at the beginning of last year to 750.
In addition to applying for a license, Binance is also technically implementing advanced detection tools for access in some areas. In 2022, Binance will continue to improve its security system and introduce more and stronger authentication protocols. At present, Binance's KYC requirements are extremely strict: only users who have passed government authentication can trade encrypted assets on its platform. This not only reduces the possibility of criminals using the platform to transfer illicit funds, but also enhances security for all users.
In order to further strengthen the fight against cybercrime, ransomware and financial terrorism, Binance increased its investment in security and compliance by more than 500%, and became the first encrypted asset exchange to join the National Cyber Forensics and Training Alliance (NCFTA) platform. (Note: NCFTA is a nonprofit organization focused on identifying, deterring, and eliminating cybercrime.)
In 2022, Binance's security and investigations team responded to 47,000 law enforcement requests, and organized and participated in more than 70 anti-cybercrime workshops attended by global investigative agencies and cybercrime fighters.
“Regulatory compliance is very important to Binance’s mission to popularize crypto assets and protect users’ safety. By ensuring compliance with high regulatory standards, we can provide millions of users with access to compliant financial products and services, and increase trust in the industry and popularity.” CZ said in the open letter, “I can proudly say that Binance will be at the forefront of regulatory compliance in the past, present, and future.”
In the coming year, Binance will continue to collaborate with global regulators and policy makers to ensure compliance with all current requirements and promote the rationalization of crypto asset regulatory policies, creating an environment conducive to financial innovation while protecting users.
3. Continue to build Web3
In the past few months, the impact of the bankruptcy of FTX and Alameda Research is gradually showing, and many encryption projects have encountered a liquidity crisis and are on the verge of bankruptcy. For example, Ren Protocol shut down the Ren 1.0 network in December due to lack of operating funds.
When the industry was in crisis, Binance stood up and launched the Industry Recovery Initiative (IRI) to help high-quality projects survive the liquidity crisis. Binance stated that IRI is not an investment fund. IRI will last for about 6 months and will be fully flexible in terms of investment structure (tokens, stocks, debts, convertible bonds and other instruments can be used), and solutions can be tailored according to needs. plan.
Additionally, Binance has pledged $1 billion to IRI, which will increase to $2 billion in the future if needed. IRI has also been recognized by top institutions in the encryption industry. Jump Crypto, Polygon Ventures, Aptos Labs, Animoca Brands, GSR, Kronos, Brooker Group, TRON DAO, Huobi Global, Poloniex have also committed to join the plan and provide funds. So far, Binance has received 150 projects applying to IRI for funding.
In addition to helping crypto companies in trouble, Binance has also vigorously supported and funded the development of many crypto start-up projects in the past few years. Through Binance Labs, it has invested more than 500 million U.S. dollars in Web3 and blockchain innovation projects, covering GameFi, Multiple subdivision tracks such as NFT and DEX, as well as various types of infrastructure.
“My goal remains to keep everyone at Binance focused on what matters most: building, and staying user-centric. I’m proud that everything we do still adheres to these core values .” CZ said that the mission of Binance is to continue to build Web3, promote the development of the industry, and build a communication bridge between the encrypted asset world and traditional finance.
In addition to in-depth participation in the Web3 field, Binance will also invest in other traditional track projects in 2022, starting a crazy layout mode. For example, Binance invested US$500 million to help Musk acquire Twitter; Binance announced a strategic partnership with Korean entertainment companies YG Entertainment and SM Brand Marketing. NFT ecosystem. In addition, in 2022, Binance will also sponsor a number of sports events and cooperate with many celebrities to increase the promotion of encrypted finance:
Binance officially announced that it will cooperate with the Confederation of African Football (CAF) to become the official sponsor of the 2021 TotalEnergies Africa Cup of Nations (AFCON);
Binance has cooperated with the Argentine Football Association (AFA), one of the largest football federations, to become its main sponsor, and will cooperate to issue fan tokens in the future;
Binance becomes the exclusive cryptocurrency sponsor of the Brazilian Football League;
Binance became the official encrypted asset trading platform partner of the 64th Annual Grammy Awards;
Binance teamed up with Cristiano Ronaldo (C Ronaldo) to provide exclusive NFT collections;
Binance teamed up with The Weeknd to create the world's first Web3 tour event;
TikTok star Khaby Lame teams up with Binance to raise awareness about cryptocurrencies.
In addition to investment, Binance is also actively promoting Web3 education in the mainstream society, helping users acquire as much relevant knowledge as possible, ranging from basic security advice to advanced blockchain concepts and understanding complex financial product mechanisms.
In 2022, a total of 26 million people will start to learn about encrypted assets through Binance Academy, and the academy team will also bring encrypted assets and Web3 education to 73 universities (25 in North America, 23 in Europe, 20 in the Middle East and North Africa, Asia Pacific, and 5 Latin American universities), benefiting more than 5,500 students. In order to further spread the knowledge of encrypted assets, Binance Academy has also begun to produce and publish structured online courses in 14 languages, and plans to launch a job search course for future Web3 professionals next year.
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“No matter what the story will be in the coming 2023, we are ready. Binance has an excellent, diversified professional team with a mission, a management team composed of management experts, and sufficient capital reserves .” CZ revealed that in the coming year, Binance will focus on building practical tools, continue to expand the team, and provide support for promising projects.
Looking at the development of the encryption industry, the market downturn is just a self-adjustment of the industry's growth. We believe that when the next bull market comes, encrypted finance will be more benign and mature. And the cornerstone leading to the future is being built and consolidated.
