CZ Binance's six-year anniversary letter: Stick to doing the right thing, and the world will give you positive feedback.

Original Title: "Binance Turns 6"

Original Author: CZ

Original Translation: Wu Shuo Blockchain

On the occasion of our sixth anniversary, let us take this opportunity to look back on the past, share our story, and look forward to the future. Today, Binance is a platform that provides financial services to over 140 million users worldwide, and in the future, it may welcome billions of new users. And all of this, at first, was just a dream.

Here, I would like to share with you some of the most profound moments that have influenced me during this journey:

筚路蓝缕，创业维艰

translates to

It's a long and hard road to start a business

Six years ago, with your support, Binance raised the equivalent of $15 million in cryptocurrency assets and began building a spot trading platform. Two weeks later (today, six years ago), Binance was born, with a total of 5 tokens listed and 2 service languages provided. At that time, our customer service team was borrowed from a friend's company, and we did not have our own marketing team.

Now, Binance has listed over 600 types of tokens, offering more than 40 service languages and a customer service team of thousands. Currently, BNB Chain provides support for decentralized trading platforms and various storage applications.

After only two months since its establishment, Binance faced a severe test. On September 4th, 2017, the Chinese mainland issued a ban on cryptocurrency trading platforms and ICOs. Chinese ICO projects had to return funds to investors.

As soon as the ban was issued, many token prices plummeted. Several projects listed on Binance even fell below their issuance price, and the project teams did not have enough funds to compensate investors.

Our team received a phone call after calculation, asking if we wanted to use Binance's own funds to compensate these investors. The total amount was 6 million US dollars, which was definitely not a small amount at the time, but we all agreed to do so. The phone call lasted only 5 minutes, and I was still on a moving train at the time. A few minutes later, we released the announcement.

At that time, the $6 million accounted for over 40% of our total funds, making it the largest expenditure in Binance's history in terms of proportion. We were still a startup that had only been established for two months, without any profits yet, and were still burning money on recruitment, server purchases, and other expenses.

But at that time, my only thought was to protect the users.

Indeed, as long as you do the right thing, the world will give you positive feedback. Our decision has received strong positive feedback from the global cryptocurrency community, and many new users have come to us. One month later, our user base reached 120,000 and we began to make profits.

And since then, we have always maintained profitability.

At the same time, we continue to build and our user base continues to grow. On December 18, 2017, I received many congratulatory messages from friends. It took me a few minutes to understand that on that day, Binance became the world's largest cryptocurrency asset trading platform by trading volume, and we have maintained this position to this day.

However, Binance's growth was not smooth sailing. Just a few days later, a potential venture capital firm (Sequoia) filed a lawsuit against us. The lawsuit lasted for several years, but we ultimately emerged victorious. Many internet startups with significant capital flows may not have been able to withstand such a lengthy legal battle, but fortunately, due to our cryptocurrency assets, we established a sustainable business model. Several years after the lawsuit ended, this potential investment firm became a limited partner in Binance Labs' second fund at our invitation. I am happy to say that we still maintain a good relationship with them and most issues can be resolved.

However, this lawsuit has also had a side effect on Binance, making it unable to accept investments from VCs. As a startup, our risks have increased, but in the long run, it may be helpful for us. We have been able to maintain flexible and independent operations.

Changing Regulatory Environment

In 2019, I attended a meeting with a top-level regulatory agency in Asia, and they clearly stated that they would not regulate cryptocurrency assets.

Even today, the categorization of cryptocurrency assets by most countries remains unclear. However, since 2019, many news reports have indicated that regulatory agencies are increasingly paying attention to cryptocurrency assets.

In April 2019, BitFinex was investigated. I myself have established Binance.US in accordance with regulatory procedures to serve the US market. Today, Binance.US has obtained Money Transmitter Licenses in 43 states.

Our operations around the world have proven that compliance and innovation can go hand in hand. We are proud to have obtained relevant licenses and registrations in 17 countries globally, which also demonstrates our support for regulation and the extensive efforts we have made in compliance. We believe that regulations, especially those dedicated to protecting users and encouraging innovation, are crucial for the long-term development of the industry.

With these regulations and rules, we can build a stable, secure, and reliable encrypted asset industry. We not only have an open attitude towards this, but also eager to cooperate with policy makers to shape the future of digital assets.

First Winter

In January 2018, our registered user count reached a new high (with 240,000 users registering within one hour). However, a few months later, the market began to decline and in January 2019, it reached its lowest point with Bitcoin prices hovering around $3,000 (previously reaching a historical high of $20,000).

Binance has not been deterred, but continues to build. In January 2019, Launchpad was launched and has been in operation ever since.

It is this cold winter that has made us realize how important prudent financial management is. This experience has helped us save enough cash (cryptocurrencies) during the bull market in 2021, allowing us to survive the bear market in 2022 once again.

Second Winter

A few years later, in 2022, we experienced the second cryptocurrency winter, which was more severe than the volatility in 2018. Interestingly, in several "disastrous" events that occurred in 2022, Binance was hardly affected.

In 2018, Binance invested in Terra, but did not actively manage the investment. When Terra began to experience problems in 2022, the team asked me if we should sell its tokens, and I said "no, let's continue to hold them."

So, we witnessed how the 3 million US dollars invested in 2018 turned into 1.6 billion US dollars at the peak of Terra's price in 2021, and then dropped to almost 0 US dollars in 2022. And until today, the LUNA (now LUNC) tokens we received are still stored in our original receiving address, never transferred or sold.

Binance has not exposed any risks related to Three Arrows (3AC), and we do not have any borrowing or business relationship with them. They have an account on Binance, but their main trading activities are still conducted on FTX.

Binance invested in FTX in the early stages and completely exited early as well. This was before FTX's collapse a year and a half ago, and before their high-profile political donations. After FTX's collapse, we also tried to lend a helping hand.

We signed a Letter of Intent (LOI) to conduct in-depth due diligence, but soon discovered that we could not proceed with the transaction. This is the extent of our involvement (non-involvement) in this matter. I believe that FTX must have undergone a thorough investigation after its bankruptcy, and it is clear that Binance has no connection with FTX, otherwise Binance would have made headlines again.

However, even so, some regulatory agencies or media always want to group Binance and FTX together. To this, I can only say: we are different. Just like not every investment company on Wall Street is Madoff.

Binance has not invested in or participated in Genesis and Celsius. Binance.US (independent of Binance.com) once invested $10 million in a deposit to try to help Voyager, but was eventually forced to withdraw from the bidding and did not recover the $10 million deposit.

2023 to present

In 2023, we see the market recovering, but at the same time, industry regulations are becoming increasingly strict. Based on everything that happened in 2022, this is not surprising. When regulatory agencies target the cryptocurrency industry, Binance is the first to be hit because of our size. Therefore, it is our responsibility to lead by example and work with global regulatory agencies to promote industry development.

I want to emphasize again that the future will not be smooth sailing, but we will always prioritize the interests of our users. We will continue to cooperate with regulatory agencies. In order to continue to protect users and fight for industry rights, we will also defend what we believe is right, even if it means defending ourselves in court.

Looking to the Future

I believe there are several major trends in the future.

Traditional finance (TradFi) giants such as BlackRock, Citadel, and Fidelity have all entered the cryptocurrency market, which confirms the development prospects of this technology and industry. They will gradually promote the popularization of cryptocurrency assets in the institutional market. As institutional investors occupy the majority of the stock market with trillions of dollars in volume, even if only a few percent is converted into cryptocurrency assets, it will expand the current cryptocurrency market several times over.

The development of DeFi will continue to accelerate. Updated wallet technology will make it easier for users to hold cryptocurrencies themselves. More and more people will use DeFi products to interact directly on different blockchains. For those who cannot access traditional financial (or banking) services, this also provides them with a channel to enter the financial market. I firmly believe that in the next six years or so, the market size of DeFi will definitely surpass CeFi.

Regulation will become increasingly clear, and more and more trading platforms will be subject to regulation. Although there is still much uncertainty at present, many countries will provide clearer guidance for the cryptocurrency market at a faster pace. Undoubtedly, countries that can prioritize this will enjoy significant advantages, and these advantages will last for centuries. We are at a critical moment in history.

用户第一

translates to

User First

in English.

Before deciding to establish Binance, we knew that we were going to take a path that no one had taken before. However, what we did not anticipate was the powerful force of the community that accompanied us and shaped and supported every attempt and effort we made. You - the users of Binance - have been the most unwavering force of Binance from beginning to end, helping us to continue to grow.

Every success and milestone we achieve today is inseparable from your commitment and dedication. Binance is not just our company, but also a vibrant and resilient community that upholds the mission of achieving free flow of money.

Our journey began with users and continues to be inspired by them. Every product, service, and innovation we release is centered around the user. Your trust in us fills us with a sense of responsibility and guides us to break conventions and shape new industry standards.

We and our users are symbiotic. The real feedback from users guides us in the right direction and drives us forward, which has also made Binance what it is today. More importantly, it is your passion and relentless pursuit of a better encrypted ecosystem that drives us to strive for excellence.

I will always be grateful for the journey we have taken together. Whether it is now or in the future, you are the core and soul of Binance.

CZ

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