Binance: One year on from FTX’s downfall – Yahoo Finance

0

When cryptocurrency exchange FTX collapsed, it should have been a boon for its rival Binance, but it only made things worse for the world’s largest crypto exchange.
The exchange — which reportedly employs over 6,500 staff — has faced an onslaught of headwinds since November last year when its Chief Executive Officer Changpeng Zhao (CZ) sold FTX’s FTT tokens. That move triggered a surge in withdrawals from FTX, which in turn revealed a shortfall on the rival exchange of over US$8 billion in customer funds.
But since then, all eyes have turned to Binance and CZ.
“Binance is still the biggest exchange in the world, but it has faced a difficult year marred by regulatory enforcement actions, falling volumes, and a reputational hit,” said Clara Medalie, research director at crypto data firm Kaiko.
Here’s Forkast’s guide to where things stand for Binance, almost a year after FTX’s downfall. Binance did not respond to a request for an interview or provide commentary for this article.
Binance is everywhere and nowhere all at once. The global exchange sits within a Cayman Islands holding company and has no formal headquarters — a structure that’s helped Binance skirt global regulations over the years.
“The exchange has been known to be accessible to users in all countries around the world,” said Robert Le, a crypto analyst at capital markets data platform Pitchbook. “Binance.com has in the past provided instructions on how to access their services via VPN.”
Binance is said to operate in over 100 countries, but only lists 45 on its website. The rise of the cryptocurrency market, when Bitcoin hit peaks of US$69,000, and its abrupt collapse put the spotlight back on the global operations of crypto exchanges as FTX’s collapse heightened regulators’ concerns.
The United Kingdom’s Financial Conduct Authority (FCA) raised concerns about Binance’s ambiguous corporate structure in 2021 leading to the financial regulator revoking the exchange’s U.K. permissions earlier this year. Last week, Binance attempted to reinstate some local services with a new partner, but the FCA promptly intervened, asking the partner to withdraw any existing approvals.
Binance sold its Russian entity to the newly-launched exchange CommEx amidst regulatory pressures and potential sanctions violations. Despite the ongoing divestment, Binance still lists Russia as an operational country on its website. Binance also closed shop in Canada due to restrictions on stablecoin use while withdrawing from several European countries, like Germany, the Netherlands, and Austria due to registration issues. It also sought deregistration in Cyprus, aiming to focus on fewer entities in Europe and comply with the European Union’s Markets in Crypto Assets (MiCA) regulation.
Binance exited Belgium only to return three months later. The exchange also reentered Japan and cleared the third stage of Dubai’s four step licensing process. Binance is also dominant in Turkey, said Kaiko’s Medalie.
Using fiat pairs trading volumes as a proxy for trading activity, Binance appears dominant in several developing countries. It has 86% market dominance in Brazilian Real transactions, 69% in Nigerian Naira transactions, and 57% in Argentine Pesos transactions, said Jacob Joseph, a research analyst at digital asset data firm CCData.
Global regulators have been homing in on Binance since FTX’s collapse. In February, the New York Department of Financial Services (NYDFS) ordered Binance’s stablecoin partner Paxos to stop minting Binance USD (BUSD). The loss of BUSD, the third largest stablecoin in the market at the time, was a major blow to Binance.
Then the U.S. Commodity Futures Trading Commission (CFTC) charged Binance, Zhao and the exchange’s former chief compliance officer Samuel Lim with operating an illegal derivatives exchange and evading federal law. The CFTC action was quickly followed by the U.S. Securities and Exchange Commission (SEC), which filed 13 charges against Binance and Zhao including operating an unregistered exchange and the unregistered sale of securities. Binance said it would vigorously defend itself against the allegations.
The exchange is also reportedly facing a number of investigations including from the U.S. Department of Justice over potential violations of Russian sanctions as well as a broader probe, according to Reuters.
In Australia, regulators have been investigating Binance’s former derivatives operations, while in France there’s been an investigation into whether Binance carried out adequate money laundering checks and illegally advertised to consumers. Most recently, a congressional committee in Brazil recommended the indictment of Zhao and several other executives last week for running “a financial pyramid scheme” in the country.
Binance is not taking the accusations lightly, splashing the cash on lobbyists and lawyering up. In the first six months of this year, Binance spent more than US$1 million on lobbying in the U.S., almost as much as it spent on lobbying in all of 2022, according to data from OpenSecrets.
As Binance splurged on legal support, it made cuts within its organization. Binance.US eliminated an unspecified number of jobs in June, while the broader company laid off around 1,000 employees in July. A few months later, Binance.US cut around a third of its workforce.
Position
Former Executive
Replacement (if applicable)
Binance.US’s CEO
Brian Shroder
Norman Reed (Interim)
Binance’s Chief Strategy Officer
Patrick Hillmann

Binance Global Head of Intelligence & Investigations
Matthew Price

Binance Chief Business Officer
Yibo Ling

Binance’s General Counsel
Han Ng
Eleanor Hughes
Binance.US’s Head of Legal
Krishna Juvvadi

Binance.US’s Chief Risk Officer
Sidney Majalya

Binance’s Head of Asia-Pacific
Leon Foong

Binance’s Global Head of Product
Mayur Kamat

Position
Executive
Co-founder & Chief Customer Service Officer
Yi He
Binance’s Chief Compliance Officer
Noah Perlman
Binance’s Chief Marketing Officer
Rachel Conlan (Prev. VP of Global Marketing until September)
Binance’s Head of Financial Crime Compliance
Tigran Gambaryan
Binance’s Regional Markets Oversight
Richard Teng
Binance and several of the executives who have departed attributed this to natural turnover rather than the exchange’s legal and regulatory battles.

“Some of our team members are growing into bigger roles, some outside of Binance. We are supportive of everyone,” said Zhao on X (formerly Twitter). “Some are doing new exciting ventures. I even made intros/references for many of them.”
It’s not only employees that Binance has lost in the last year. Several key partnerships have come to an end including its relationships with Paxos and its on-ramp service providers Paysafe and Checkout.com.
The loss of on-ramp services are impeding the process of onboarding traders in Europe, said Kaiko’s Medalie. Binance’s market share in pound and euro trading volumes are down 6% and 14% respectively compared to 35% and 28% at the start of the year, said CCData’s Joseph.
Binance’s debit card programs have also halted with Mastercard ending its offering entirely and Visa distancing itself from the exchange. Internally, the exchange is streamlining services.
Some partnerships are continuing to bloom including plans to offer a stablecoin in Japan with Mitsubishi UFJ Financial and TrueUSD (TUSD), a little-known stablecoin, replacing BUSD.
“Over the past year, the exchange has experimented with different types of trading promotions using little-known stablecoins such as TUSD or FDUSD,” Medalie said. “These trading promotions have temporarily boosted volumes, but because the markets are zero-fee, it has likely not translated into additional revenues for the exchange.”
Binance generates around 90% of its revenues from transaction fees, said Zhao in a November TechCrunch interview. The exchange maintains around 50% of global volumes, Medalie said, which is down from a high of over 70% earlier this year. Revenues for Binance’s U.S. arm is reportedly down 70% year-to-date.
“The discontinuation of the zero-fee trading promotion for USDT pairs in March, alongside increased regulatory scrutiny, has primarily driven Binance to record seven consecutive monthly declines in market share,” said CCData’s Joseph.
Exchanges, such as M2 — which is reportedly backed by Abu Dhabi — are hoping to take advantage of this change in market conditions. However, they still have to contend with broader headwinds including a general decline in trading appetite, a fast-changing regulatory environment and an already crowded landscape.
“No entity, regardless of its size, is immune to failure, with FTX, Terra/Luna, and especially Mt. Gox — which accounted for nearly 70% of the bitcoin transactions back in 2014 — serving as poignant examples,” said Joseph. “Should Binance fail, it would deliver a substantial blow to the industry and could potentially dissuade both retail and institutional participants from actively engaging in the crypto markets.”
This is a perspective shared by Pitchbook analyst Le. Though there would be no government intervention if Binance were to fail, he expects other exchanges such as Coinbase, OKX and Bybit to eventually fill the vacuum.
“The asset class has navigated through similar perils in the past and, given enough time, would likely continue to do so,” Joseph said.
The crypto conference held in Singapore in September attracted an unprecedented crowd of 20,000 attendees, filling the island state with an even greater number of blockchain enthusiasts who hopped in and out of the hundreds of side events across the city to avoid the costly ticket of the main event. Over in the U.S., an ominous cloud was forming as the government's flurry of actions against crypto titans, from FTX and Ripple to Binance and Coinbase, continued to chill the industry. The "anti-crypto position" from Washington regulators, coupled with the Federal Reserve's raising of the federal funds rate and the resulting impact on broader interest rates, has "quite negatively impacted VC investment in the crypto ecosystem," Kevin Goldstein, senior advisor to crypto investment firm HashKey Capital, told TechCrunch.
The burn mechanism is based on BNB's price and the number of blocks generated on the BNB Smart Chain (BSC) during the quarter.
Week three of FTX founder Sam Bankman-Fried's trial is kicking off. Prosecutors have indicated jurors will soon hear from FTX co-founder Nishad Singh. Tully & Weiss criminal defense attorney Joseph Tully discusses what to make of the defense's strategy and how the remainder of the legal proceedings could play out.
The Silicon Valley VCs are linking up with the University of Arkansas, in a state with lawmakers and companies like Walmart and J.B. Hunt that are eyeing blockchain and crypto. Arkansas “is home to innovative entrepreneurs, major corporations with global reach and policymakers including Rep. French Hill and Sen. John Boozman, both of whom have taken an interest in digital asset technology,” a Haun executive said.
Moderna stock and BioNTech stock led a sell-off Monday among Covid vaccine makers after Pfizer slashed its full-year guidance.
One bull said bitcoin is “more valuable than gold” and will become a $15 trillion asset.
Companies are seeing health-insurance costs climb at the steepest rate in years, a trend that has finance chiefs looking for ways to remain competitive with job seekers while managing those higher expenses.
Managing your taxes can be one of the most complex aspects of estate planning and a new IRS rule change continues that trend. The rule, published at the end of March, changes how the step-up in basis applies to assets held in an irrevocable trust. If you need help interpreting the IRS rule change or setting […] The post Want to Leave Assets to Heirs? IRS Rule Change Should Have You Rethinking Your Irrevocable Trust appeared first on SmartReads CMS – SmartAsset.
The global financial crisis that began in 2007 reshaped the real estate market. Today, commercial real estate is facing a similar “Great Reset.” Property valuations are resetting, capital availability is restricted, and investment activity is curtailed.
(Bloomberg) — Charles Schwab Corp. executives said its cash-sorting problems, with clients moving money from the bank into higher-yielding products, are beginning to abate despite persistently elevated interest rates.Most Read from BloombergIsrael Latest: Army Says Hamas Officials Dead; Over 600,000 in Gaza Flee SouthUS Pushes to Contain Israel-Hamas War, Warns Iran About EscalationUS to Tighten Curbs on China’s Access to Advanced Chip TechStocks Rise Amid Efforts to Stifle Israel Conflict: Mar
(Bloomberg) — Lithium giant Albemarle Corp. has walked away from its A$6.6 billion ($4.2 billion) takeover of Liontown Resources Ltd., after Australia’s richest woman built up a blocking minority and effectively scuppered one of the largest battery-metals deals to date.Most Read from BloombergIsrael Latest: Army Says Hamas Officials Dead; Over 600,000 in Gaza Flee SouthUS Pushes to Contain Israel-Hamas War, Warns Iran About EscalationUS to Tighten Curbs on China’s Access to Advanced Chip TechSt
It's good practice as an investor to listen to really smart people.
"The average stock has already broken down technically… the signals are weaker and suggest key tactical support is vulnerable," Mike Wilson said.
Today's Research Daily features new research reports on 16 major stocks, including NVIDIA, Procter & Gamble & NextEra Energy.
Todd Combs, investment officer at Buffett’s Berkshire Hathaway, also shared advice for those starting out in their careers.
A handful of healthcare REITs have been on the upswing, as recent improvements in occupancy rates and their ability to restructure leases with facility operators have buoyed the share prices of several companies in the subsector. Analysts are taking note of the improvements. Take a look at three healthcare REITs that have received analyst upgrades this week. Sabra Health Care REIT Inc. (NASDAQ:SBRA) is an Irvine, California-based healthcare REIT that has 426 U.S. properties in its investment por
HONG KONG (Reuters) -Country Garden's entire offshore debt will be deemed to be in default if China's largest private property developer fails to make a $15 million coupon payment on Tuesday, the end of a 30-day grace period.Non-payment of this tranche is set to trigger cross defaults in other bonds as is standard in bond contracts. Lack of payment – which is expected after Country Garden last week warned about its inability to meet offshore debt obligations – would make the firm the latest in scores of Chinese developers who have defaulted. Country Garden has also missed other offshore payments in the past few weeks though those payments still have not seen their 30-day grace periods lapse.
Bank of America will have all eyes on its balance sheet when it reports third-quarter earnings before Tuesday’s opening bell. The expectations for Bank of America (ticker: BAC) are muted, especially compared with the strong showings last week from JPMorgan Chase (JPM), Citigroup (C), and Wells Fargo (WFC). Net interest income, which has been a savior for banks in this shaky economy, is expected to climb 2%, to $14.1 billion.
TSLA advanced Monday. Wall Street expects Tesla EPS to drop 30% to 73 cents, the lowest in two years for Chief Executive Elon Musk, but with revenue increasing 13% to $24.32 billion. Analysts are also expecting Tesla profit margins to remain below its self-described "floor" amid fears there will be more surprise price cuts in the final months of 2023.
ASML Holding's (ASML) third-quarter results are expected to reflect benefits from strong momentum across EUV and DUV systems amid macroeconomic headwinds.

source

Leave a Reply

Your email address will not be published. Required fields are marked *