Changpeng Zhao (CZ) Handwritten Letter: Binance Celebrates Its Sixth Anniversary, Looking Ahead to Three Major Trends

Binance founder Changpeng Zhao CZ, on the occasion of the company's sixth anniversary, has penned a letter to the community expressing his thoughts over the past six years. He mentioned that Binance has not always had a smooth journey and shared his outlook on three major trends for the future.

Zhao Changpeng CZ's Handwritten Letter in Full

Dear Binance Users,

As Binance celebrates its sixth anniversary, let us take this opportunity to look back on the past, share our stories, and look towards the future. Today, Binance is a platform that provides financial services to over 140 million users globally, with the potential to welcome billions more in the future. All of this started as a dream.

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

The Beginning of an Ordinary Journey

Six years ago, with your support, Binance raised $15 million worth of crypto assets, starting to build a spot trading platform. Two weeks later, six years ago today, the Binance trading platform was born, with 5 listed tokens and 2 service languages. At that time, our customer service team was borrowed from a friend's company, and we did not have our own marketing team.

Today, Binance has listed over 600 tokens, offers services in over 40 languages, and has a customer service team of over a thousand people. BNB Chain now supports various storage applications from decentralized trading platforms.

Two months after Binance was founded, we faced a severe test. On September 4, 2017, the Chinese government issued a ban on crypto asset trading platforms and ICOs. Chinese ICO projects had to return funds to investors.

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

Our team called me after calculating and asked if we should use Binance's own funds to compensate these investors. The total amount was $6 million, which was certainly not a small sum at the time, but we unanimously agreed to do so. The call lasted only 5 minutes, and I was on a moving train at the time. A few minutes later, we issued an announcement (link1, link2).

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 just a startup that had been established for two months, had not yet turned a profit, and were still burning money on recruiting and purchasing servers.

At that time, my only thought was: protect the users.

As expected, the world favors those who do the right thing. Our decision received strong positive feedback from the global crypto community, and many new users flocked to us. A month later, our user base reached 120,000, and we began to turn a profit.

Since then, we have continued to be profitable.

Meanwhile, we continued to build and grow our user base. On December 18, 2017, I received many messages of congratulations from friends. It took me a few minutes to realize that on that day, Binance became the world's largest crypto asset trading platform by trading volume, a position we have maintained to this day.

However, Binance's growth has not been without challenges. Just a few days later, a potential venture capital firm filed a lawsuit against us. The lawsuit lasted for several years, and we ultimately emerged victorious. Many internet startups with significant cash flow may not be able to survive such lengthy lawsuits, but fortunately, due to having crypto assets, we established a sustainable business model. Years after the lawsuit ended, at our invitation, the potential venture capital firm became a limited partner in the second round of Binance Labs' fund. I am happy to say that we still maintain a good relationship with them to this day, and most issues have been resolved.

However, this lawsuit had side effects for Binance, preventing us from accepting investments from VCs. As a startup, our risk increased, but in the long run, it may have been beneficial for us. We were able to maintain a flexible and independent operation.

The Ever-Changing Regulatory Environment

In 2019, I met with top-tier regulatory authorities in Asia, who clearly stated that they would not regulate crypto assets.

Even today, most countries' classification of crypto assets as an asset class remains unclear. However, since 2019, there have been many reports indicating that regulatory authorities are paying more attention to crypto assets.

In April 2019, BitFinex came under scrutiny. I myself established Binance.US according to regulatory procedures to serve the US market. Today, Binance.US has obtained Money Transmitter Licenses in 43 states in the US.

Our operations globally have proven that compliance and innovation can go hand in hand. We are proud to have obtained relevant licenses and registrations in 17 countries worldwide, demonstrating our support for regulation and the extensive efforts we have made in the field of compliance. We believe that regulations, particularly those that focus on protecting users and encouraging innovation, are crucial for the long-term development of the industry.

With these regulations in place, we can build a robust, secure, and reliable crypto asset industry. We are not only open to this but also eager to cooperate with policymakers to shape the future of digital assets together.

The First Winter

In January 2018, we reached a record number of registered users (with 240,000 users registering within an hour). A few months later, the market began to decline, and in January 2019, it hit its lowest point, with the price of Bitcoin reaching around $3,000 (having previously reached a historical high of $20,000).

Binance was not deterred but continued to build. In January 2019, Binance Launchpad was launched and has been operational since.

It was this winter that made us realize how important prudent financial management is. This experience helped us save enough cash (crypto assets) during the bull market in 2021, allowing us to weather the bear market of 2022 once again.

The Second Winter

Years later, in 2022, we experienced a second crypto asset winter, which was more severe than the volatility of 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 encounter problems in 2022, the team asked me if we should sell its tokens. I replied, "Do not sell; we will continue to hold them."

As a result, we witnessed that the initial $3 million investment made in 2018 turned into $1.6 billion at the peak of Terra's price in 2021, only to drop to nearly $0 in 2022. To this day, the LUNA tokens we received are still stored at the original receiving address, never transferred or sold.

Binance did not expose itself to 3AC Three Arrows, and we had no borrowing or business relationship with them. They had accounts on Binance, but their main trading was on FTX.

Binance invested in FTX in the early stages and fully exited early. This was a year and a half before FTX collapsed and before they made high-profile political donations. After FTX collapsed, we also tried to lend a helping hand.

We signed a letter of intent (LOI) to conduct in-depth due diligence, but soon found that we could not proceed with the transaction, which is the extent of our involvement (non-involvement) in this matter. I believe that after FTX went bankrupt, a thorough investigation was undoubtedly conducted. It is clear that Binance and FTX have no connection; otherwise, Binance would have made many headlines.

However, some regulatory authorities or media always try to link Binance with FTX. To this, I can only say: we are different. Just as not every investment firm on Wall Street is a Madoff.

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

From 2023 to Present

In 2023, we see the market recovering, but at the same time, industry regulation is becoming stricter. Based on everything that happened in 2022, this is not surprising. As regulatory authorities target the crypto asset industry, Binance, being the largest player, is at the forefront. Therefore, it is our responsibility to lead by example and collaborate with global regulatory authorities to promote industry development.

I want to emphasize once again that the future will not be smooth sailing, but we will always prioritize user interests. We will continue to cooperate with regulatory authorities. To continue to protect users, advocate for the industry's rights, and defend what we believe is right, even if it means defending in court.

Looking to the Future

I believe the future holds the following trends.

Traditional finance institutions such as BlackRock, Citadel, and Fidelity are increasingly entering the crypto market, confirming the development prospects of this technology and industry. They will gradually drive the mainstream adoption of crypto assets in the institutional market. As institutional investors dominate the majority of the stock market, with volumes in the hundreds of trillions of dollars, even if only a few percent convert to crypto assets, it will significantly increase the size of the current crypto asset market.

The development of DeFi will continue to accelerate. New wallet technologies will make it easier for users to hold crypto assets 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 provides them with a channel to enter the financial market. I firmly believe that in the next six years or so, the market volume of DeFi will surpass CeFi.

Regulations will become clearer, and more regulated trading platforms will emerge. Although there is still much uncertainty, many countries will provide clearer guidance for the crypto market at a faster pace. Undoubtedly, countries that can act first will enjoy significant advantages that will last for centuries. We are at a crucial moment in history.

User First

Before deciding to establish Binance, we knew that we were embarking on a path that no one had taken before. However, what we did not anticipate was the incredible power of the community, which has accompanied us in our growth, shaping and supporting every attempt and effort we have made. You - Binance users - have always been the most unwavering force behind Binance, helping us continue to grow.

Every success we achieve today, every milestone we reach, 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 enabling the free flow of money.

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

We and our users are symbiotic. Your genuine feedback guides us, propelling us in the right direction and shaping the Binance of today. More important than anything else is your enthusiasm and relentless pursuit of a better crypto ecosystem that drives us to strive for excellence.

I am forever grateful to walk this journey with you. Whether now or in the future, you are the core and soul of Binance.

CZ