Feb 4, 2022
Binance Exchange SVET Review and Rating
That is what one of the SVET Authors — Konstantine — writes in his Binance Exchange analysis:
Quote:
SVET Execution (Solution — Validity — Equity– Team)
Solution: when studying the main source of information for the review — the Binance exchange website — I could not find any documentation that tells about the activities of the company, however, the various sections of the site will be enough to understand how this company works and get acquainted with its business model. So, I propose to briefly familiarize yourself with what Binance is. According to information posted on the Wikipedia website, you can find out that Binance is the largest cryptocurrency exchange in the world, founded in 2017 in China, and has the largest daily trading volume [1]. Binance’s own website also states that it is the world’s leading cryptocurrency exchange. A distinctive feature of Binance is the increased transaction time compared to competitors (more than 1.4 million per second) [2]. Moreover, since its foundation, this company has managed to expand the boundaries of its activities by creating its own ecosystem based on the blockchain network [3]. And the vision of the company is «to increase the freedom of money globally» [2].
The business model of the exchange is quite simple and consists in earning from commission deductions. There are several types of commission: for withdrawal of funds and for direct trading, i.e. making transactions. There are no commissions for depositing funds to the exchange [4]. Regarding the withdrawal fee, it is worth clarifying that there are more than 500 cryptocurrencies on Binance [5], and the fee for each of them is set separately and is a fixed rate, which depends on the state of the blockchain network and may increase depending on congestion. More details can be found on their website [4]. The commission for trading also varies depending on the type of trading: for standard transactions — 0.1%, for spot trading — 25%, for futures trading — 10% [6], for margin trading — from 0.02% to 0, 3% [7].
Also, Binance has its own BNB token based on the Ethereum network blockchain. It can be used to pay for goods and services, reduce transaction fees, and for other purposes [8]. According to CoinMarketCap, the market capitalization of BNB is $63 billion [9].
According to Bloomberg, the Binance platform generated revenue of $5.5 billion and $20 billion in 2020 and 2021, respectively, i.e. it is possible to trace the positive dynamics and increase in profit by almost 4 times [10].
So, based on the information above, Solution rating for Binance will be a+.
Validity: as stated above, the crypto exchange Binance was registered in China in 2017 [3]. However, a few months after registration, the Chinese Government imposed a ban on the operation of cryptocurrency exchanges in the country due to the fact that large volumes of illegal export of money could occur through such platforms. As a result of the ban, the Binance team was forced to leave China and move to neighboring Japan, but some difficulties soon appeared there as well. In 2018, the Japanese financial regulator found out that the crypto exchange was trading without the required license [11]. After this incident, the company stopped disclosing its location, but announced its intention to open an office in Malta [1].
However, at the moment it is not known for certain where
the headquarters of Binance is located and, moreover, there is no exact information about the legal status of this exchange. On the site, I also could not find the exact legal address of the registration of the platform. And in the Terms of Use of the crypto-exchange only its name is indicated, i.e. «Binance», or the wording «Binance Operators» is used [12]. However, at the moment it is known that the company is registered in the Cayman Islands [1].
It is also worth mentioning that the question about the headquarters of the company and its legal status was asked to the founder — Changpeng Zhao (CZ), but the exact answer was not received, and CZ himself said that the Binance office is where he is. The answer to the question of where the company pays taxes was also not received [13].
Also known information from Bloomberg regarding the investigation against Binance by the US Department of Justice and the IRS in May 2021 [14]. The investigation concerns the potential detection of money laundering and tax crimes by the world’s largest cryptocurrency exchange. In addition, there is information about at least two more bans and proceedings in the UK and Thailand [1].
Taking into account this information, Validity rating will be a-.
Equity: when considering the financial position of Binance, it is important to clarify that the platform is the largest cryptocurrency exchange in the world, with a daily turnover of more than $50 billion (as of early February 2022) [15]. And the annual turnover for the entire time of its existence has grown from $59 billion in 2017 to $7.7 trillion in 2021 [10].
Moreover, as mentioned earlier, the exchange has its own BNB token with a market capitalization of $63 billion [9].
The company’s net profit for 2020 amounted to $900 million [10].
Regarding large investments in Binance, we can say about ICO (Initial Coin Offering) of BNB tokens in 2017, during which it was possible to raise about $15 million [3]. And the CrunchBase portal estimated the total amount of funds raised at $35 million over 10 funding rounds [16].
Thus, Equity rating can be set at level b.
Team: according to the information I was able to find, Binance has 14 employee profiles on the CrunchBase website [17]. The most famous of them is Changpeng Zhao — he is also the founder. He is a fairly well-known figure in the world of cryptocurrencies. Longtime Head of Research and Development at Bloomberg Tradebook Futures until he stepped down from the position in 2005. Founded Fusion Systems in the same year, this company was engaged in the creation of high-frequency trading (HFT) systems for stock brokers [3]. Later, he was a staff member at Blockchain.info as Chief Technology Officer. And also, briefly held the position of technical director at a crypto exchange OKCoin [1].
Other members include Catherine Coley — CEO, Yi He — Co-Founder & CMO (Marketing Director), Jarred Winn — Senior Vice President, David An — BD (business development) Director and others [17]. Profiles of most key employees can be found on LinkedIn, links will be left in the sources section, and more information can also be found directly on the Binance page on LinkedIn, which has over 348,000 followers [18].
Also, according to open sources, I managed to find out that the number of employees in Binance as of January 2022 was 4,000 people [19]. They work remotely in more than 50 countries around the world [13].
Team rating will be a+.
Rating: a+ / a- / b / a+
References:
1. Wikipedia.en: Binance https://en.wikipedia.org/wiki/Binance
2. Binance: About https://www.binance.com/en/about
3. Wikipedia.ru: Binance https://ru.wikipedia.org/wiki/Binance#cite_note-1
4. Binance: Deposit & Withdrawal Fees
https://www.binance.com/en/fee/cryptoFee
5. Investopedia: Binance Exchange https://clck.ru/arwWZ
6. Binance: Trading Fees https://www.binance.com/en/fee/trading
7. Binance: Margin Data https://www.binance.com/en/margin-fee
8. Binance: What is BNB? https://www.binance.com/en/bnb
9. CoinMarketCap: BNB https://coinmarketcap.com/ru/currencies/bnb/
10. Business of Apps: Binance Revenue and Usage Statistics (2022)
https://www.businessofapps.com/data/binance-statistics/
11. vc.ru https://clck.ru/arwjE
12. Binance: Terms of Use https://www.binance.com/en/terms
13. forklog.com https://clck.ru/arwnV
14. forbes.ru https://clck.ru/arwop
15. CoinMarketCap: Binance https://coinmarketcap.com/ru/exchanges/binance/
16. CrunchBase: Binance. Total Funding Amount
https://www.crunchbase.com/organization/binance/company_financials
17. CrunchBase: Binance. Employee Profiles
https://www.crunchbase.com/organization/binance/people
18. LinkedIn: Binance https://www.linkedin.com/company/binance/
19. forklog.com https://clck.ru/arwzQ
20. LinkedIn: Changpeng Zhao https://www.linkedin.com/in/cpzhao/
21. LinkedIn: Catherine Coley https://www.linkedin.com/in/catherinegcoley/
22. LinkedIn: Jarred Winn https://www.linkedin.com/in/jarredwinn/
EQ:
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