In brief
- Binance's US subsidiary announced a "seed round" of more than $200 million.
- The new funding signifies the company is serious about building out its North American operations.
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The U.S. subsidiary of Binance, the world's biggest crypto exchange, announced on Wednesday that it raised more than $200 million from the venture wing of Circle and other investors, including VanEck and RRE Ventures.
The company is calling the investment a "seed round"—a term usually associated with small startups—and said the new money values Binance.US at $4.5 billion.
Brian Shroder, the CEO of Binance.US, told Decrypt the company will use the funding to accelerate growth of its spot trading platform, launch new products and services, and pursue acquisitions.
All of this comes at a time when the parent company of Binance.US is making an effort to win trust with governments and regulators around the globe, which have accused the company of skirting know-your-customer laws and turning a blind eye to suspicious trading practices.
Part of this effort has entailed hiring former tax and law enforcement agents, and executives from the traditional tech and finance world—most recently, Binance named a longtime Microsoft vet as its CTO.
The stakes are particularly high in the United States, where Binance is reportedly under investigation by the Justice Department, the SEC and other agencies. This may explain in part the company's decision to hire Shroder, a low-key former Uber executive, to lead its U.S. operations.
Binance's US ambitions
In the past, the dividing lines between the parent company and Binance.US have been blurry. In 2020, Forbes published evidence to suggest the purpose of Binance's U.S. subsidiary had been to divert regulators' attention from the fact many Americans were trading on its loosely-regulated global platform.
The hiring of Shroder six months ago and the new seed round backed by well-known investors suggest Binance.US may be turning a page, though Binance's founder Changpeng "CZ" Zhao—who until recently delighted in operating as a maverick—will maintain an indirect hand.
"Binance.US and Binance.com operate as separate legal entities," Shroder told Decrypt by email. "CZ is the founder and Chairman of both companies. Binance.US’s management team and I are responsible for the company’s day-to-day operations, decision-marking, and overall business strategy."
In the short term, the biggest challenge for Binance.US is likely to be attracting marketshare in a market dominated by longtime incumbent Coinbase. According to data from CoinGecko, recent 24-hour spot market trading volume for Binance.US was around one-tenth that of Coinbase, though the company's volume was third overall—and well head of FTX, another high profile upstart.
According to Shroder, Binance.US has already made big inroads with little marketing, and expects to ramp up advertising efforts following the funding round.
"We also believe that our platform has inherent competitive advantages – including low fees and a more sophisticated trading experience – which will continue to attract both retail and institutional customers," said Shroder.
Currently, Binance.US. says it can process 1.4 million orders per second, and that it offers more than 85 tokens and 190 trading pairs on its platform.
Meanwhile, CZ is ramping up his ambitions for the Binance brand as a whole, recently declaring he planned a spree of acquisitions among non-crypto businesses so as to increase the industry's overall footprint. The founder has already made one such foray—recently laying down $200 million to invest in Forbes.
Other investors in Binance.US's seed round are Foundation Capital, Original Capital, VanEck, Gaingels and Gold House. Binance describes the latter two investors as "mission driven firms focused on diversity, equity, and inclusion."