Aug 2, 2023

According to a report from The Information, Binance CEO and founder Changpeng "CZ" Zhao nearly shuttered the crypto exchange's U.S. arm earlier this year in order to protect the wider company.

Video transcript

According to a report in the information, Binance nearly shuttered its US operations to protect its global bread and butter. Now, Binance is a top dog when it comes to crypto volumes globally. And they decided maybe at one point to cut off the US to preserve the breadwinner of the global brand. Uh According to the information, at least that was not able to be decided upon and the Binance US continues to pace. So we'll talk about that one first and then we'll shift gears and talk about some really interesting data about Binance still being quite operational in China despite an alleged crypto ban over there. Let's talk about the US thing first and then we'll shift gears over to China Wendy. What do you think about this report from the information and what's being alleged here? Smart move, bad move. What do you think? I don't blame them. Why would you stay somewhere where you are not treated best? A really good friend of mine, Mark Moss always says, go where you are treated best. And I remembered that and I still remember that today. Why would any crypto company want to continue to stay in the United States of America, all they seem to be doing is just wasting their money. I want to say that ripple has spent over $200 million approximately on their lawsuit against the SEC. And that money could have been used not only to, you know, hire more people to build, to expand, but I do know that they have a very extensive educational, um, fund that they do send out to different colleges or, you know, different communities to help people actually down what Blockchain technology is and about, you know, whatever. So I feel like a lot of people are just kind of tired, they're getting fed up. We're seeing a lot of companies move over to the Middle East. Um and over to Asia, there's a lot of money flowing over there in the United States, not so much. And we're also seeing a lot of other companies create um shops, set up shops in other countries. I want to say and please correct me if I'm wrong, I want to say a 16 Z created um something elsewhere. Um Coin base and Gemini and all these other companies are establishing branches overseas because that's a lot more regulatory friendly. And I feel like the US is kind of shooting themselves in the foot and I wanna say there's some other reports coming out um about how overleveraged we are monetary wise and it just is not looking too terribly great here. And I'm also considering relocating as well because if I can't work here in the US, if I can't do my crypto stuff, then what am I gonna do? That's no fun. And also I like to be able to be a content creator and I don't know if I could do that in the US anymore because we don't have any clear types of guidelines. I mean, if I can maybe chime in on this, I think whether or not it's a good thing for crypto, it certainly, it seems like the intended outcome or one of the intended outcomes of um you know, counselors crackdown on the industry whether or not um any of these cases or most of these cases have been settled yet, clearly, it's having the intended effect of chasing business out of the United States. And I agree with you, I don't know why they would stay in the United States because not only is it a huge headache but as um you know, recent reporting about, for example, um finance is huge China market has underscored the US is not a huge market for buying or for many of these other exchanges that are not primarily based in the United States. So I don't know why they'd stay here for that reason alone. And then one more thing that I thought was crazy. Um you know about um a a lot of, you know, the the stuff with this whole um report is just around the board meeting itself, um, where there was division within the company around what to do here. It's not like they were kind of wavering and CZ decided, ok, we're not gonna do this. After thinking he would, this being pulling out from the United States, there was a board vote and, um, the head of the US exchange decided that he didn't want to leave who chairs that board. And that's kind of what happened. I'd love to have been a fly on the wall of that meeting. Um, Wendy, what do you think? Just really quickly before giving it over to Zach? Like, I feel like Binance did the best that they could, like they were operating in the US. They had all these products and services. The US is like, hey, we don't really want you to have these here. You can't do that. So when they were told that they went ahead and left and that was due to no regulatory clarity by the SEC or other public servants. And in response to them, you know, kind of closing off the US market because I remember Binance, I used to trade on Binance. I loved it. It was a really great exchange and then I wanna say it was summer of 2020. They're like, ok, you have to KYC and if you're a US citizen, you can't use it anymore. So they gradually push people off, but they did it in a very ethical way. And in response to that action from, from the SEC or whomever they created Binance US, which had like five different trading pair. And you can basically just buy, sell and do limit orders. They didn't have anything, you know, they had a very bare exchange there which they wanted to become as compliant as they could. And again, that still wasn't good enough for the US, which again should be very problematic and I know that's not how the law works. Um But I wish that it did and they could just see all of the horrible choices that the SEC has made in Binance and other crypto asset companies have been doing their best to accommodate nonexisting regulation. Zac yeah, a good segue to the other piece of Binance news that came out today by way of the Wall Street Journal, something like 20% of global volumes uh come from China. Now this is a surprise to some observers in crypto who say, hey, wait a minute, China has a crypto ban. A lot of informed observers, especially Emily Parker who works at Coindesk have been sounding this alarm for a while. This is not not a ironclad ban by any means, right? This is a very porous ban and crypto activity has been taking place in China despite this alleged ban for a number of years. Now, we get some fresh data from some reporting by way of the Wall Street Journal suggesting that China really is a big part of the mix when it comes to the total trading volume that Binance sees on a daily basis. Pretty crazy to see this breakdown and really speaks to the continued activity, interest and um excitement that crypto finds in Asia relative to a more dour and gloomy picture here in the US. Specifically, you're seeing trade volume by country China, South Korea, the top two. Let's talk about this report as well. Sam, I'll throw this your way. What do you think? Yeah, I mean, there were some crazy things in this report and glad you flagged Emily Parker. She has been sounding the alarm bell or whatever you wanna call it bell on this for a while. This ban is not really a ban. As with many of the things that we hear coming out of China, there are ways to get through them. VPN S are ubiquitous in the country. Um But anyway, some of the crazy things in this report, I mean, it was not just the number of or the amount um rather of Cryptocurrency or the value of Cryptocurrency that's traded on the platform. It was the number of wallets as well or the number of users um that Binance apparently has recorded as its transacting there. I think it was close to a million 900,000, I think is the number that's, you know, coming to my mind. Don't quote me on that, but it's something massive and the good um the other thing that I thought was crazy about this too is that it really does just highlight the opaqueness of Binance as a company. The fact that not only did we not realize that China, what we being, you know, the general public realized that China was a big customer of this platform, um which makes sense. They didn't want to show us this but um for, for reasons, but not only did we not realize that it was a big customer, but apparently the biggest, that's just crazy and it just shows you how little we still understand about Binance like it or not. Um Wendy, what do you think? I've got friends that are very active in crypto and our builders do all kinds of really great stuff and they are in China and for the last couple of years, they said, no, it's not that um crypto is really banned here, people are still using it. So I just feel like there's a big disconnect from what's actually happening and the news that we, the news that were presented in the United States. And again, that's not, it has nothing to do with coin de reporters. It has to do with more mainstream media news and some of the reports that they're giving out talking about what's going on in China. I feel like a lot of these reports are not necessarily accurate. And again, the only thing I do want to pick on you for with the the wallet creations or having more using that number wallet creations as active users. I don't feel like that's ever accurate. Like I always have at least like 2 to 3 accounts on different exchanges for different offset reasons for different positions that I'm opening in different types of trading styles. I'm doing. So that, that's the only thing I want to say. But I do believe China has been playing four D chess with us the entire time. They've kind of been silently doing things. Yes, that they're very um controlling over what their people can and can't do. But at the end of the day, they're not gonna let the, they're not gonna let the US out do them when it comes to tech. And I just feel like America just keeps looking like a bigger and bigger laughing stock of the world at this time. Just want to put a finer point on what Sam said about, you know, uh Binance being a black box, right? And I think that's very true and very remarkable feature of the crypto space that these open ledgers which provide unprecedented transparency toward uh financial matters uh still are largely sort of administered to the centralized exchanges, centralized companies that are uh the opposite of the transparent, are very opaque. And it takes reporting such as this to reveal some of those details that otherwise aren't on chain, aren't visible to anyone who wants to look into it. So anyway, I just thought that was a good point. Sam. Shout out to you. But sir, the banks, the banks, traditional finance, you can't track cash. Anyways, we could talk, I could talk about this all day long. Are they seeing China? I mean, that's another question too. All the users in China, like is there a database somewhere in Binance? Because that goes to the account thing as well? Like I, I didn't read closely enough, but I don't know if those were Binance accounts or if those were addresses, the 900,000 figure that apparently was the right now. I don't even know what that corresponds to. But if there's any number, there's probably a list somewhere and if it were really illegal, you know, we know who has it. Um So anyway, it's just really interesting is indeed in the report itself. I will say it's noted as active users, whether or not that is an accurate representation, 1 to 1 wallet to person. Hard to say it's a level of nuance that sometimes doesn't make it into the final cut.

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