This year's crypto market has encountered unprecedented difficulties.

Externally, global central banks, especially the Federal Reserve, are raising interest rates and shrinking their balance sheets (which has not stopped yet), resulting in reduced OTC liquidity and insufficient incremental funds; internally, the U.S. SEC has sued leading trading platforms such as Binance and Coinbase, causing widespread panic, market makers to withdraw, thin on-site liquidity, and reduced market depth. According to data from data company Kaiko, Bitcoin's market depth has fallen by 20% since the beginning of this year.

Under internal and external difficulties, various FUDs emerged one after another, intending to disrupt the market and fish in troubled waters. As the world's largest crypto exchange, Binance has become the first target of FUD attacks. Various rumors such as "Binance was sued and shut down by the SEC", "large-scale layoffs", "cryptocurrency listing", and "Binance's market share has declined" are flying around, and some of them are fueled by world-renowned financial media. In the end, the fluctuations in market sentiment are transmitted to the performance of currency prices, with more frequent surges and plunges, and retail investors become the final "payers" of fluctuations.

In the face of doubts, Binance founder CZ always responded immediately, calling on the market to ignore FUD. At the same time, he also knows that actions speak louder than slogans, and the best way to fight back against rumors is to speak with facts. Binance has always been actively promoting compliance processes in other parts of the world, and has obtained a digital asset operator license from the Thai Ministry of Finance, and the compliant exchange in Kazakhstan has been officially launched. It has successfully acquired a licensed exchange in Japan and plans to make new progress this year.

In addition, during the market downturn, Binance still insisted on building the encryption industry. On the one hand, it improved the underlying infrastructure development and launched the distributed storage solution BNB Greenfield and the Layer 2 expansion solution opBNB. At the same time, it increased investment to support various Web 3 projects; on the other hand, it actively created new industry trends, introduced fresh blood into the market through blockchain education, and expanded the influence of the Web 3 world.

"The crypto winter may last at least 18 months. We are actively preparing our trading system for the upcoming bull market." In a recent Twitter Space, CZ revealed that Binance is preparing for higher trading activities, sending a signal to the market that Binance is still strong.

1. Deep in the FUD vortex, Binance responded positively

" 4 " has now become the new popular "code" in the crypto community.

This meme originated from a tweet by CZ at the beginning of the year, in which he said that he would focus on four things this year: "1. Education; 2. Compliance; 3. Products and services; 4. Ignore FUD, fake news and attacks, etc." Since then, CZ has often posted tweets with the number "4" on social media, sometimes with a selfie, hoping to quickly express the meaning through this short phrase or gesture. The code was then widely circulated and became a new symbol of crypto culture.

CZ selfie with the number " 4 "

A tall tree attracts the wind. CZ's premonition at the beginning of the year was finally confirmed. Binance has been attacked by various FUDs this year, especially after the SEC in June. Such news has increased. The recent rumors surrounding Binance are mainly as follows.

FUD 1: “CZ and Binance are being sued by the SEC for securities violations, there could be jail time, and Binance will shut down”

First of all, the SEC's violation of securities laws is more like a pocket crime. Many crypto projects including Kraken and their founders have been accused of this crime. In the end, the crypto projects paid compensation to settle the case. Only a few were held criminally responsible for "defrauding investors". CZ has not been charged with any criminal charges. Currently, Binance is actively responding to the lawsuit and has hired former U.S. Deputy Assistant Attorney General M. Kendall Day as a lawyer to attend the lawsuit initiated by the SEC.

In addition, after FTX went bankrupt, the SEC's enforcement actions against cryptocurrencies began to expand gradually, reaching 19 times in total, a nearly 2-fold increase year-on-year. Even Coinbase, known as the most compliant trading platform in the United States, could not escape the clutches, and Binance was also affected because of its status as a leading crypto company. In this battle between regulators and the entire crypto industry, Binance and Coinbase are like soldiers on the front line attracting firepower. If they fail, the future of the entire crypto industry will be dark.

"If they really take the time to understand our industry, they will find that if Binance is not compliant, then almost no other global trading platform or offshore company is compliant." Binance co-founder He Yi said in an exclusive interview with Bloomberg, "We respect the attitude of regulators, whether they support or oppose the development of cryptocurrencies. I understand that the overall intention of regulation is good in order to protect investors. The global regulatory trend is inevitable, and it is not something that can be solved by shouting a few slogans of struggle."

FUD 2: “SEC lawsuit leads to freezing of Binance.US assets and shutdown”

The SEC has tried to freeze Binance.US assets but failed, and the SEC has no evidence that it has misused customer assets. The case is still under trial, and Binance.US is actively responding to the lawsuit and has hired George Canellos, former co-director of the SEC's enforcement division, as a lawyer to participate in the defense.

In addition, Binance.US has never stopped withdrawing coins, but only terminated support for US dollar deposits and trading pairs. The previous delay in US dollar withdrawals was also resolved in late June, and Binance.US is still operating. However, affected by the lawsuit, Binance.US's US market share has dropped to 2.7%, the lowest level since December 2020.

FUD 3: “Binance is under investigation again, and senior executives are leaving the company one after another”

According to Fortune, Binance Chief Strategy Officer Patrick Hillman, Senior Vice President of Compliance Steven Christie, and Legal Counsel Hon Ng have resigned. The article stated that the executives' departure was because Binance was facing an investigation by the U.S. Department of Justice for suspected money laundering, sanctions violations, and attempts to deceive U.S. regulators. The news caused panic in the market. The Wall Street Journal reported that Binance has fired some U.S. employees and is planning to cut the number of local employees in the United States.

However, the facts are not as some media speculated. After the article was published, the resigned executives responded one after another, saying that the report was untrue and that their resignation was mainly due to personal reasons. Patrick Hillman said: "I still respect and support @cz_binance and am grateful for the opportunity to work under his leadership. I have worked here for two years and now it is time to take on the next challenge. I will continue to support my colleagues at Binance." Steven Christie also posted on social media: "My departure is far less sensational than any article describes. I had a great time at Binance. I have learned more during this period than at any other time in my career."

CZ also responded on Twitter, saying that every company has turnover, but the reasons exaggerated by the "news" are completely wrong. "As the market and global cryptocurrency environment changes, as our platform grows, and as personal circumstances change, every company will have turnover. We thank all the departing team members for their contributions to our growth and wish them all the best. We also congratulate those team members who have grown into new roles. They are all truly high-quality talents. We will continue to build and we will continue to recruit."

FUD 4: “Binance has triggered a wave of withdrawals, its market share has fallen, and its leading position is no longer there”

According to DeFiLlama data, some time after the SEC lawsuit, market panic led to an increase in fund outflows from Binance, with total assets falling from $64.1 billion on June 5 to $54.7 billion on June 15. However, in the following half a month, as traditional financial giants such as BlackRock applied for spot ETFs to stimulate market sentiment, Binance once again became the first choice of investors, with total assets rising all the way to a maximum of $62.7 billion (July 12), basically recovering lost ground. As shown below:

In terms of net capital flows, Binance’s net inflow of assets reached $2.01 billion in the past month, ranking first; Bybit, which ranked second, had a net inflow of assets of $280 million, which was only 14% of Binance’s net inflow of funds. As shown below:

July 13 data

Of course, the above data is for reference only, because the flow of funds may sometimes be related to arbitrage behavior. Especially during periods of drastic price fluctuations, many arbitrage traders transfer large amounts of funds between various trading platforms, and the amount is usually several times more than usual. For reference, Binance had an outflow of more than $7 billion in one day after the bankruptcy of FTX in November last year, but nearly $10 billion in funds flowed in in the following days.

In addition, MUSE Labs data shows that the proportion of BTC and ETH held in Binance addresses in the entire industry has gradually increased. Among them, the proportion of BTC has increased from 24.3% at the beginning of the year to 26.9%. During the same period, the proportion of BTC held by Coinbase has decreased from 21.2% to 20.1%; the proportion of ETH has increased from 23.9% to 27.7%, and the proportion of ETH held by Coinbase has decreased from 21.7% to 20.9% during the same period, as shown below:

FUD 5: “Coin listing controversy, poor coin launch performance”

As the entire crypto market is in a bear market, many projects launched by Binance Launchpad and Launchpool this year have achieved good wealth effects and received widespread attention from the market. There are also some lawless elements who, under the guise of "friends" or "besties" of the founder of Binance, claim that they can get investment quotas or guarantee that projects will be launched on the Binance platform in order to make profits.

He Yi recently refuted the rumor about "Best Friend Xiaomei" on his social media, calling on investors to be careful not to be deceived. "It is not up to one person to decide whether Binance will list coins. We try to take into account the needs of most users in the logic of listing coins." He Yi further explained that the underlying logic of Binance listing coins is to try to list projects that can survive longer and bring returns to users. "This is actually the gap between investment research capabilities and aesthetic differences. The platform that can identify the appropriate projects and timing for listing coins in the long run will have users who can survive longer. This is the core competitiveness of the platform."

CZ also spoke on Twitter Space and said: "What Binance values ​​most when listing a coin is whether the project has a real user base and real application scenarios. If not, then factors such as team and history will be considered. Binance does not want to launch projects that use Binance users as seed users, as this is very risky." In addition, CZ also said that instead of over-considering how to be listed on Binance, it is better to spend energy on long-term product construction.

Regarding the poor performance of some currencies after listing on Binance and the surge and plunge of some small currencies, He Yi said, "Launchpad project wallets and market maker accounts are monitored, and Launchpad project tokens currently require multi-party custody of project tokens as part of mutual supervision." In response to the continuous decline in the prices of recently launched tokens, He Yi responded that the market is sluggish, and both large and small tokens that have been launched recently are falling; the price of most altcoins in the market has fallen by 80%-90%, including all the popular king-level projects; some IEO projects have been pulled up to 10 times or 20 times after listing, which is not in line with the current market situation. Users are urged not to blindly believe in the community’s calls and blindly chase high prices.

In addition to the above major FUDs, there are also a series of rumors surrounding Binance on a daily basis, such as "market manipulation" and "employee insider trading". Binance has also responded to these rumors many times. CZ once said that Binance is particularly strict in internal control. No matter how senior the employees are within Binance, they must hold their positions for more than 90 days after buying before they can trade (30 days in the early days).

2. Stay dormant in the bear market and continue to dig deeper

Whenever doubts are raised, Binance always responds immediately, calling on the market to ignore FUD, but the best way to fight back against rumors is to speak with facts.

1. In terms of compliance, Binance is actively promoting compliance processes in other regions around the world outside the US market.

Currently, the US SEC and CFTC are arguing over the right to regulate cryptocurrencies. The US market lacks a comprehensive regulatory framework, and crypto companies are facing increased compliance and operating costs, gradually shifting away from the US market. Hong Kong has become a crypto-friendly city this year and has opened up crypto license applications, which is undoubtedly a good way out for Binance. According to Tencent News’ “Qianwang” report, in the past few months, Binance has begun to connect with Hong Kong regulators and participated in the Hong Kong Monetary Authority’s cryptocurrency and stablecoin regulatory consultation.

In May this year, Binance also obtained a digital asset operator license in Thailand, which is its first license in Southeast Asia. The license was granted to Binance's new joint venture Gulf Binance, which will operate as a digital asset exchange and digital asset broker, powered by Binance's technology. In Europe, Binance will register in six EU member states, including France, Italy, Poland, Spain, etc., in accordance with the anti-money laundering requirements of the MiCA Act, to accelerate the transition to MiCA. In addition, Binance is applying for local exchanges in Japan and Kazakhstan, which have made recent progress and landed to provide encryption services to the local area.

2. BNB Chain integrates "governance security, smart contracts, storage, and scalability" in one.

In addition, during the market downturn, Binance still insisted on building the encryption industry, improving the underlying infrastructure development, launching the distributed storage solution BNB Greenfield and the Layer 2 expansion solution opBNB, and at the same time increasing investment to support various Web 3 projects.

On February 1 this year, BNB Chain released the BNB Greenfield white paper. The core of Greenfield is a storage chain and storage node network, which consists of the storage-oriented BNB Greenfield network and the decentralized Storage Providers (SP) network; users upload their data storage requests to BNB Greenfield, and SP stores the data off-chain. According to the deduction of BNB Chain, subsequent website hosting, personal cloud storage, content payment, social media and other fields can all use BNB Greenfield for storage.

“In 2023, with BNB Greenfield, BNB Chain will create a new theme for data ownership and utility. BNB Greenfield will bring utility and financialization opportunities to data in storage, and programmability to data ownership,” said Victor Genin, Senior Solutions Architect at BNB Chain.

If BNB Greenfield meets the storage needs, the newly launched Layer 2 network opBNB in ​​June this year completely opens up the original performance limitations of BNB Chain. opBNB is an Ethereum Virtual Machine (EVM)-compatible L 2 scalability solution based on Optimism OP Stack, which greatly improves the scalability of L 1 to reduce network congestion and network fees while maintaining a similar security level to L 1. opBNB's innovative underlying combination, including optimizing data accessibility, caching layers, and adjusting the submission process algorithm to allow more parallel operations, enables opBNB to reach a Gas limit of up to 100M. Based on these comprehensive optimizations, opBNB can support more than 4,000 transfer transactions per second, with an average transfer transaction cost of less than $0.005.

So far, in the entire BNB Chain ecosystem, BNB Beacon Chain focuses on BNB governance and security, BNB Smart Chain provides smart contract computing, BNB Greenfield provides decentralized storage, and opBNB solves the scalability problem. The four are integrated, with different directions, but all take BNB as the core value of the entire system.

3. Binance expands the industry through underlying infrastructure and education.

Binance is actively creating new trends in the industry, introducing fresh blood into the market through blockchain education, and expanding its influence in the Web 3 world.

Nowadays, the Web 3 chain ecosystem continues to explode, and users' learning needs are rapidly becoming professional and systematic. Simple popular science articles are far from meeting user needs. At the same time, the number of industry participants is showing explosive growth: including technology or project enthusiasts and practitioners, etc. The continuous growth of these participants has also brought more related needs for Web 3 education. Binance, DCG, a 16 z, Sequoia, etc. have already laid out this track.

In particular, CZ ranked education first in his tweet at the beginning of this year, which is enough to show the importance of education in his heart. Since then, CZ has repeatedly discussed the importance of Web 3 education in different occasions and AMAs, "Binance is still not doing well in the field of education, so education is something Binance should pay attention to." In addition to verbal emphasis, Binance also promotes Web 3 education in practice. For example, Binance Academy has been committed to the popularization of Web 3, providing users with all content about cryptocurrency and blockchain. It is one of the largest and most comprehensive online cryptocurrency libraries in the world. .

3. Six years of entrepreneurship, starting over

1. There is 1 Binance user for every 66 people in the world

Since the birth of Bitcoin in 2008, the entire history of crypto finance has only been fifteen years. The market has been bullish and bearish, and most crypto companies have died before they survived, with an average lifespan of less than three years. For Binance, it has been six years since its birth, and it has not only survived, but also achieved rapid development. In addition to trading, it has developed in multiple areas and has become a comprehensive Crypto Group with employees covering more than 110 countries around the world.

According to the CCData report, CEX spot trading volume increased by 16.4% to US$575 billion in June this year, with Binance accounting for 41.6% and ranking first; CEX derivatives trading volume increased by 13.7% to US$2.13 trillion in June, and Binance remained the largest crypto derivatives trading venue, with a trading volume of US$1.21 trillion in June, accounting for 56.8%. According to Binance's official data, as of July this year, Binance supports 18 service languages ​​worldwide, with a total of more than 120 million users who have undergone KYC certification, equivalent to 1 Binance user for every 66 people in the world.

After becoming the top trading business, in order to meet users' demand for more innovative blockchain products, Binance has also continuously expanded its business boundaries, explored new growth points, and developed in multiple lines. It has developed into a comprehensive blockchain group, mainly focusing on investment, technology research and development (public chain), financial management, stablecoins, NFTs, payments, charity and other dimensions. Taking investment as an example, since 2018, Binance Labs has invested in and incubated more than 200 projects around the world, focusing on key areas such as infrastructure, decentralized finance (DeFi), gaming and metaverse (Gaming Metaverse), social finance (SocialFi), crypto financial technology, and developer applications and tools. Binance Labs' investments cover infrastructure, product applications, Web 3 tools and other aspects. Representative projects include Polygon, GOMBLE, SafePal, Sui and many other high-quality projects.

2. The ecosystem breaks boundaries and never sets limits

After achieving success, Binance always keeps in mind the user-first principle and puts user interests first.

Recently, the Rug Pull project XIRTAM transferred the 1,909 ETH raised to the Binance exchange, and Binance also assisted in freezing the funds at the first time. In the following month, the Binance security team has been working hard to communicate and continue to solve problems related to the XIRTAM project. Finally, Binance issued an announcement that Binance users affected by the XIRTAM incident can submit specific information through the form before August 2, 2023 to apply for the return of XIRTAM assets; after the affected accounts are verified, the Binance security team will return the corresponding ETH assets to eligible users through the smart contract address.

"All our achievements today are based on the trust of our users. We have always regarded user-centricity as our core value. Everything we do is telling users: We are worthy of your long-term trust. We must protect users while promoting industry development and innovation in a sustainable and responsible manner." said CZ.

Especially after FTX went bankrupt last year, the asset reserve issue of CEX has attracted much attention. Binance also announced the exchange account address at the first time to show its own reserve status. In addition, the Merkle Tree reserve certificate promoted by Binance has also been recognized by other centralized platforms. All of them use this solution for auditing and publicize it on the official website. It is worth mentioning that Binance's reserve certificate only involves 8 major assets including BTC, ETH, BNB, LTC, USDC, USDT, XRP, and BUSD. It is also the exchange with the most asset categories currently covered - other platforms basically only involve BTC, ETH and USDT. According to the 8th reserve certificate released by Binance on July 1, the reserve rates of the above 8 assets are all above 100%.

At present, the scale of crypto finance is only 1 trillion US dollars, which has a strong growth space compared with the traditional market. Many people do not understand Web 3 and its impact. How to attract users to this new field and bring incremental growth to the crypto market is a question that all Web 3 practitioners are struggling to think about. From the beginning to the end, Binance has always insisted on expanding the industry, because founders such as CZ believe that only when the industry is bigger, there will be more opportunities.

“It’s very important for us to grow this industry, and this market is still young. The more people participate, the more opportunities there will be in this industry. If you are the only player, then you are in the wrong industry. We hope that Binance will be the gateway to the Web 3 world and provide a set of simple, accessible, compliant, and trusted tools for billions of users entering the new world of Web 3.”

Conclusion

The external regulatory pressure currently encountered has not knocked Binance down, because CZ firmly believes that external pressure is an important magic weapon to hone the team and enhance cohesion and combat effectiveness.

"I'm often asked what's the best way to build a tight, strong team, and the secret is some external pressure. Working together is the best way to build a tight team, it builds reliance, alliance, resilience, and most importantly, trust between team members. We're constantly facing external pressure, FUD, etc., so we're constantly fighting together. This in turn makes us more determined to move forward towards our mission to increase financial freedom for people around the world."

Regarding the future direction of the crypto market, CZ said that in the long run, he is still optimistic about cryptocurrencies. He expects that the cryptocurrency trading volume will increase in the next 6 to 18 months, and Binance is making a lot of preparations. "The crypto winter may last at least 18 months. We are actively preparing for the trading system to cope with the arrival of the bull market later."