Binance, one of the world’s leading cryptoasset exchanges, has made a number of moves over the years to the point many wonder where Binance is located. The exchange, which has been valued at more than $4.5 billion in a recent estimate, first started its operation in Shanghai.
The exchange has evolved from the simple trading of cryptoassets into employing its own research team, launching a network in the form of Binance Chain (previously Binance Smart Chain), and pushing a number of innovations in the field of crypto.
The History of Founder Changpeng Zhao
While Binance, in its current iteration, was founded in 2017, the history of the exchange’s founder and CEO Changpeng Zhao’s involvement in crypto dates further. Zhao had originally founded Fusion Systems in Shanghai in 2005, a company that built high-frequency trading systems for stockbrokers.
His work in finance and interest in the nascent field of crypto led him to join Blockchain.info – now Blockchain.com – in 2013. Zhao was the team’s third member. Zhao also became involved with the crypto exchange OKCoin, serving as the company’s chief technology officer for less than a year.
A 2018 profile by Fortune claims that Zhao went “all in” on Bitcoin in 2014, selling his house in Shanghai in order to pursue the development of his own crypto company. Zhao’s initial intention was to create a “purely digital asset exchange that would not touch fiat currencies.” He desired to break ties with existing financial institutions as a way to circumnavigate the risks and regulatory complications that had plagued other exchanges.
Binance on the Move
Leveraging the ICO boom in 2017, Zhao was able to raise $15 million via Binance’s 200 million token sale. In addition to the soaring price of BTC, Zhao used the funds to promote the exchange.
However, Binance’s launch was in part marred by the looming crackdown on crypto by the Chinese government. Zhao’s company, which was not tied to any country due to its lack of reliance on banks, was able to uproot from Shanghai and move to Japan.
The move came just a week before China announced a ban on crypto trading. Zhao was able to move all of Binance’s servers out of China, in addition to the company’s core team. In January 2018, just months after the ban, Binance was named the world’s largest cryptoasset exchange with a market capitalization of $1.3 billion. Despite stiff competition from other exchanges, including the U.S.-based Coinbase, Binance has managed to hang onto its top spot for more than four years.
In March 2018, as the crypto markets entered a precipitous decline, Binance announced an intention to open an office in Malta and signed a Memorandum of Understanding (MoU) with the Malta Stock Exchange to develop a platform for trading security tokens. The move came in response to steeper crypto regulations by both Japan and China. The company also signed a Memorandum of Understanding with the Government of Bermuda for the operation of a crypto exchange.
Around the same time, Binance announced the creation of Binance Jersey, a European-based company that would be an entirely independent entity from the parent company Binance.com. The goal of the move was to expand Binance’s European influence and offer crypto-fiat trading pairs, including the Euro and British Pound.
Despite signing a MoU with Malta, the country’s Financial Services Authority (MFSA) balked at media reports referring to Binance as a “Malta-based” company. The regulatory body announced in February 2020 that Binance was “not authorized by the MFSA to operate in the cryptocurrency sphere and is therefore not subject to regulatory oversight by the MFSA.”
Where is the exchange located?
The murkiness surrounding Binance’s official headquarters gained even more attention just months later. At ConsenSys’ Ethereal Summit in May 2020, Changpeng Zhao was asked by Laura Shin where his company’s headquarters are located.
According to a report by CoinDesk, Zhao reddened at the question, before stammering,
Well, I think what this is is the beauty of the blockchain, right, so you don’t have to … like where’s the Bitcoin office, because Bitcoin doesn’t have an office.
Zhao continued, saying that Binance has many offices with staff located in 50 countries. He referred to the company as a new type of organization, without the need for a registered bank or postal address. He compared the exchange to the difference between a horse and a car, despite both being means of transportation, and summarized,
“Wherever I sit, is going to be the Binance office. Wherever I need somebody, is going to be the Binance office.”
Shin pressed the issue further, leading Zhao to say that he was not trying to “obfuscate” or “hide,” the company’s location, and that Binance was “in the open.”
The Cayman Islands
Despite claiming to be based out of Malta, reports began to emerge that Binance was actually located in the Cayman Islands. A report by The Financial Times said the exchange had moved its corporate registration to the Cayman Islands.
A corporate linkage document that was later confirmed by Decrypt showed the company had registered Binance Holdings Limited in George Town, Cayman Islands in 2017. The company used the address to register multiple trademarks of the Binance name and logo in March 2018, furthering its ties to the country.
Ted Lin, Binance’s chief growth officer, told Decrypt at the time that Malta served as the company’s “spiritual headquarters,” saying:
We have offices in Malta for customer services, and some compliance people there, but it’s not the headquarters per say. It’s the spiritual headquarters. It’s a name that people think about when they think about Binance.
Binance did not comment on allegations that the company was operating a “ghost” business, as revealed in 2018 financial records that contained no transactions, no trades, and no taxes paid.
To add to the confusion, a report by The Block claimed that Binance may have never actually left China. Binance’s Shanghai office, which boasted some of the exchange’s top executives–including Zhao–and more than 50 employees, abruptly closed at the end of 2019 following a probe by the Shanghai government. Sources told The Block the closure came in the aftermath of the office being visited by local officials.
When contacted over the closure, a spokesperson for Binance said the company did not have “a fixed office in Shanghai,” or “entities in China,” and that most of the employees “work remotely in China.”
Another Move on the Horizon?
While it became gradually more accepted that Binance was operating out of the Cayman Islands, the country’s financial regulator weighed in on the situation. In an announcement made in July 2021, the Cayman Islands’ Monetary Authority (CIMA) said the company was not authorized to operate in the country.
The release stated:
“Binance Group and Binance Holdings Limited are not registered, licensed, regulated or otherwise authorized by the Authority to operate a cryptocurrency exchange from or within the Cayman Islands.”
CIMA continued, saying that Binance was not subject to its regulatory oversight, and that it was investigating whether the business fell within its jurisdiction.
As of May 2022, Binance’s headquarters is still listed as the Cayman Islands. However, the company appears to be preparing for another move. According to a Fortune profile of Changpeng Zhao in March 2022, Binance’s CEO claimed that he has told regulators the company will announce a proper headquarters “very soon.”
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