Reporter: Cai Ding Editor: Lan SuyingIn every corner of global cryptocurrencies, there is a trading platform called Binance.This world's largest cryptocurrency exchange was founded and operated by Zhao Changpeng (CZ)
Reporter: Cai Ding Editor: Lan Suying
In every corner of global cryptocurrencies, there is a trading platform called Binance.
This world's largest cryptocurrency exchange was founded and operated by Zhao Changpeng (CZ). From Bitcoin trading, digital art to venture capital, Jin'an is the leading platform. Last year, after the collapse of SamBankman Fried's FTX empire, Coin An's strength and influence only increased, becoming the only giant in the cryptocurrency field.
However, on Monday, March 27th Eastern Time, the lawsuit filed by the US Commodity Futures Trading Commission (CFTC) against Coin An and its CEO, Zhao Changpeng, may completely change the cryptocurrency industry.CFTC seeks compensation, civil compensation, permanent market entry ban, and prohibition against further violations of the Commodity Exchange Act (CEA) and CFTC regulations against Coin An.
70% of the transaction volume! Coin security dominates the spot market
Compared to FTX founder Sam Bankman Fried, Zhao Changpeng's impact on the cryptocurrency industry is actually much greater, which also means that CFTC has a much greater impact on Coin An and Zhao Changpeng's lawsuit.
So far, Coin Security has been the biggest target of US regulatory agencies in the cryptocurrency field. Prior to this, the US cryptocurrency exchange Coinbase, wave market founder Justin Sun, and Terra founder DoKwon were all hit by US regulatory measures.
Image source: CFTC official website
In response to the CFTC lawsuit, a spokesperson for Coin On called it "unexpected and disappointing" and stated that Coin On has made significant progress in strengthening compliance and has been cooperating with regulatory agencies, and will continue to cooperate with authorities in the United States and other places. Zhao Changpeng also stated in a blog article that the CFTC lawsuit "seems to contain incomplete statements of facts, and we do not agree with the description of many of the issues charged in the indictment
In fact, not only the United States, but also many regulatory agencies, including Malta, Japan, and the UK, have issued strong warnings as the currency attracts more and more retail investors. Coin An acknowledged that there were "gaps" in compliance in the past, and subsequently stated that it has expanded its compliance team and registered with regulatory authorities in some jurisdictions.
After Zhao Changpeng founded Coin An in 2017, he began a crazy acquisition model. Today, King'an is a company integrating brokerage, digital wallet, venture fund, custody service, data provision service, digital art service, token issuance and many other businesses.
According to Kaiko, a cryptocurrency asset data provider,So far this month, the trading volume of Coinbase accounts for approximately 70% of the cryptocurrency spot market, while Coinbase accounts for only 6%.
Image source: Kaiko
A report by independent cryptocurrency data company CoinGecko shows that in a popular product called perpetual futures,Coin An captured 62% of its global trading volume in 2022, setting a record.Kaiko's data also shows that Coin On launched a separate trading platform in the United States in 2019, which has accounted for nearly 7% of spot trading in the past year.
Bloomberg reported that CFTC's accusations on Monday will have a ripple effect throughout the industry. Although some cryptocurrency enthusiasts may dismiss CFTC's accusations, many connections between Coin An and traditional finance may now face risks. Institutions that have dealt with the cryptocurrency industry will have to weigh the latest allegations from CFTC to counter the liquidity provided by Coin Security.
The Daily Economic News reporter noticed that the relationship between Coin An and traditional banking channels has recently encountered some external shocks,Signature Bank, which had previously provided support for Coin An's US dollar trading, collapsed in mid month, while PaySafe, which provided support for its GBP trading, suspended this service due to regulatory risks.
US cryptocurrency liquidity may be affected
The reason why Coin An has quickly become a global cryptocurrency giant is not only due to Zhao Changpeng's professional knowledge, but also due to the lack of cryptocurrency regulation around the world.
Zhao Changpeng was born in Lianyungang, Jiangsu. At the age of 12, he moved to Vancouver and became a Canadian citizen. After obtaining McGill University in Canada, Zhao Changpeng began to establish a trading system.
In 2013, Zhao Changpeng ran his own software company in Shanghai. A card playing experience with the founder of Bitcoin China, Bobby Lee, and technology investor Ron Cao changed his subsequent life trajectory. That was his first encounter with Bitcoin, and his interest in this cryptocurrency prompted him to work at Blockchain. info and OKCoin, respectively. In 2014, Zhao Changpeng sold his house in Shanghai and invested his entire warehouse in Bitcoin. In 2017, he left OKCoin to establish Coinan and serve as CEO. In July 2017, Coin An raised $15 million in its initial token issuance and became the world's largest cryptocurrency exchange in less than eight months.
Although Coin An has never disclosed who its parent company is, Bloomberg reported that the Cayman Islands entity "Binance Holdings Ltd." owns the trademark of Coin An and is usually considered the primary entity. However, in jurisdictions outside the United States that require disclosure of the parent company, the entity of Coin An is usually owned solely by "CZ" (note: Zhao Changpeng). Unlike FTX, it is not yet clear whether Coin An has external investors, but its US subsidiary's seed investors include CircleVentures, VanEck, and RREVentures.
In April 2018, the 1.4 million transactions per second trading capacity of Coin An attracted 6 million users, making it the world's largest cryptocurrency exchange.In decentralized finance, Coin An also has its own BNB chain. According to CoinGecko, Coin An's own token BNB is the fourth largest token in the world, with a total circulating market value of approximately $62 billion.
At the end of 2021, against the backdrop of the surge in cryptocurrencies such as Bitcoin,At that time, Zhao Changpeng became the richest Chinese with a fortune of 94.1 billion US dollars (approximately 634.8 billion yuan), and also became one of the top ten billionaires in the world, earning global fame.However, as the global tightening trend intensifies, risky assets bear the brunt, and cryptocurrencies face tightening scrutiny from regulatory agencies around the world - since the fourth quarter of 2021, Bitcoin has been declining all the way down.
Since the end of 2021, Bitcoin has been consistently declining (Image source: Yahoo Finance)
Regarding the impact of the lawsuits against Qian An and Zhao Changpeng, CNBC reported that,The CFTC's move may overturn the operation of Coin Security, which may only be the first wave of attacks by regulatory authorities against the world's largest cryptocurrency exchange.In addition to forcing them to return their illegal gains and calculate their monetary costs, the CFTC documents also require the court to implement further measures, including prohibitions on transactions and registrations.
Dave Weisberger, CEO of CoinRoutes, a digital currency algorithmic trading platform, pointed out thatThis case may completely damage the Binance. US platform, and the business of Binance in the United States may be completely terminated. If truly implemented, it may temporarily affect the liquidity of US cryptocurrencies.
Jeffrey Blockinger, Chief Legal Advisor of VertexProtocol, a decentralized exchange, said, "The most likely scenario is that Coin An will reach a settlement or file a lawsuit. Regardless of the settlement method, it will definitely include Coin An reaching an agreement, stopping derivative sales, and further violations
Daily Economic News
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