Binance will take the arrows for industry compliance, security
Binance has grown to truly epic size and scale, with operations in more than 180 countries and clearing more than US$1 trillion in digital coins and derivatives a month.
Binance co-founder and chief marketing officer Yi He spoke with Forkast about the challenges of guiding the company through a period of rapid growth that has brought success, but also the attention, and censure, of global regulators.
He, 35, says Binance has worked hard to meet global compliance requirements and may soon announce a location for its headquarters, or for “multiple headquarters.”
Efforts to meet regulatory standards are ongoing.
See related article: Binance wants to play ball with regulators
In March, Binance announced it had won a license in Bahrain to operate as a crypto service provider and another in Dubai to serve qualified investors.
The original interview in Mandarin has been translated into English and edited for brevity.
Where are you in the process of setting up a headquarters for Binance? Have you shortlisted any location?
For Binance, having a physical headquarters is not fundamental to keeping the company up and running. But as global compliance matures, setting up a headquarters can help our industry develop towards a clear direction. If having a headquarters can ensure smooth operations for users and help with compliance, we’re willing to set up one or multiple headquarters around the world.
What is Binance’s core strategy for 2022? Do you plan to focus more on compliance?
The core strategy for 2022 remains the company’s global push for compliance, and we’re having some good progress. We are greatly expanding our compliance team to recruit professional talent and to pursue 100% completion in terms of “know your customer” (KYC) for our platform. Meanwhile, we’re also offering blockchain development consultancy in many countries and regions to help boost the development of the industry.
What are your plans for Forbes following your US$200 million strategic investment? Would you like it to cover more crypto and blockchain-related stories?
Forbes is one of the most influential and innovative media outlets globally, and both Binance and Forbes are not satisfied with the achievements in only one field but are eager for more success. We also noticed that Forbes is much more passionate for Web 3.0 than most traditional companies and has already had a separate blockchain reporting section at a very early stage. They know where the tide is going.
Can you share how big Binance really is? How many employees do you have and where are they based?
Currently we have more than 3,000 employees around the world, distributed in all countries and regions.
In the hiring process, we mainly look at their skills, such as language abilities, and if a candidate is stronger in branding, operations or information technology. That said, we mainly look at whether a candidate is a good fit based on their capabilities rather than their locations. We’ve never really had any physical offices after all.
Currently, when we apply for licenses in a certain country or region, we start to set up offices there as part of that process. If we find that there isn’t enough staff in some countries and regions, we will recruit more in regions to service those markets, such as Europe, Southeast Asia and the Middle East.
What steps has Binance taken in the past year when it comes to compliance?
When it comes to compliance, many outside voices ask if Binance is being supervised or facing regulatory pressure, and whether [Binance] is very concerned. But, in fact, internally at Binance, regulation is something we see favorably. You can even say it’s something we’ve been waiting for.
Actually, from the perspective of an industry insider, you will see that if the industry is small, no one cares about you. Only when the industry grows big enough with more people involved will regulators pay attention.
Can you elaborate more on your compliance approach?
Let me give an example. Since the first day of Binance’s establishment, we’ve had strict internal codes that regulate insider trading. In the beginning, we required staff to hold their positions for at least 30 days. We’ve since extended that requirement to 90 days. We also have a very strict firewall on our internal information management. We’ve also learned a lot from hacking attacks in the past and have set in stone a zero-trust principle [a security model that assumes nothing can be trusted until proven otherwise].
You will find that our monthly costs related to anti-money laundering and KYC are actually higher than the cost of marketing. It is difficult for a small company or an early-stage start-up to bear such an overhead. However, Binance has already gone through the early stage of development, and has accumulated a wealth of security management, anti-money laundering, KYC and other preparations.
You can say that there is no trading platform in this industry that can do better than Binance in all aspects of anti-money laundering, KYC and security.
How big is your team in the Chinese mainland?
Binance did have an office in China in 2017 but the local authority said that they did not welcome digital-currency transactions. So we moved our office out of China. At the time some colleagues left the company under that policy pressure, which we fully understood, and some relocated out of China with us.
We have invested in some companies in China and sometimes we encounter confusion about whether these companies are part of Binance or not. In fact, these companies are pure investments and we do not have any offices in China.
Where are you based now?
Actually, I am in a mobile state. I left China in 2017 and have lived in Japan, Europe, the United States, and Southeast Asia. If we keep in touch, you will find that I will be in a new place next month. I will live for a while in the Middle East and Europe.
You were a TV travel show host before. Can you tell us a little bit about your career path? When and how did you enter the crypto world?
I tried a lot of things before entering the blockchain industry. Being an on-air host was not a job I dreamed of and wanted to devote all my life to. I did it for about two years. Just eating, drinking and having fun. I felt anxious because I could see that the influence of the television industry was gradually being eroded by the internet. This was about 10 years ago and the entire traditional media industry was going downhill, while the internet was growing at high speed.
At the end of 2013, when the price of Bitcoin rose to 8,000 yuan (US$1,300), a friend who was an investor asked me to help with an advertisement for Bitcoin. I was very interested in start-ups at that time and to show my value, I did the advertisement for free. During that process, I learned that there was a new business model surrounding the trading platform where you could register an account and trade Bitcoin.
In the spring of 2014, I joined the cryptocurrency trading platform OKCoin. It was a hasty decision, but I thought it was a great opportunity. During that time, I met Changpeng Zhao and invited him to join the company. In one year, the company developed very fast, but differences of opinions and values between the founder and the cofounder appeared as the company grew, and realizing that their goals might not be the same, Zhao and I left.
Then I joined a firm called Yixia Technology. It had a short video app called “Xiaokaxiu” (小咖秀), which was quite popular at the time. It was kind of like TikTok. I stayed there for less than two years and created “Yizhibo” (一直播).
By 2017, I felt I had reached the ceiling of doing marketing and branding in China. And Zhao started preparing for the launch of Binance. He asked me if I could be a consultant as they drafted the white paper.
Before the official launch of Binance, Zhao asked again if I would consider joining. On the evening of July 13, one day before the official launch, Zhao said: “We’re going online tomorrow, and the price of BNB (Binance’s native token) might rise by 10 times, and then my offer to you will be a tenth of what it is now. You have to decide now if you are joining us or not.” So that day, I agreed to join Binance.
I officially started with Binance in August, but weeks later, on Sept. 4, China started banning Bitcoin transactions. When I saw the news, I thought: “Well, I’ll just have to keep working hard.”
We had to deregister some users in China. We offered to buy back BNB from Chinese users at the market price of around eight yuan, instead of the one yuan issue price. That was why Binance could have a good influence and receive positive feedback at the time. Many other projects would just return the money at the issue price, whether it had climbed or dropped. Although we might have to pay eight or nine times the issue price, we still paid it. At the time we used up almost all the liquidity of Binance to buy back the BNB.
In hindsight, we made some tough decisions.
Ningwei Qin and Tom Zuo contributed to this report.
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