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The rise, workings and dealings of Binance, the exchange hit by what may be the biggest crypto theft yet
Hit by a security breach, Binance pools users’ coins in wallets it controls and has paid billions to settle cases with US authorities.
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Binance, hit this week by what may be cryptocurrency's biggest theft, grew quickly into the world's largest crypto exchange after its 2017 launch and has a chequered history of US cases over anti-money-laundering rules, sanctions and securities rules.
Binance said that the security breach had an estimated $6.3 billion impact. Chainalysis, a blockchain analytics firm, put the amount stolen at $5.9 billion or more, nearly four times the previous record, the roughly $1.5 billion taken from the exchange Bybit in February 2025. The US Federal Bureau of Investigation (FBI), in a public alert, blamed North Korea for the Bybit theft. Binance has not said who was behind its breach.
An early investigation suggested the attack began with a hacked laptop belonging to one of Binance's engineers, the company said. It suspended all deposits and withdrawals and said it would cover all losses. About $3 billion of the affected assets had been frozen as of early Friday.
Much of that was frozen by the issuers of stablecoins, digital tokens pegged to the US dollar, which the issuers can lock. Tether froze more than $1.5 billion of its coins and Circle more than $800 million. Bitcoin has no issuer that could do the same. The 2008 paper that launched bitcoin, published under the name Satoshi Nakamoto, says new coins go to the computers that keep its records, "since there is no central authority to issue them".
Beginnings and growth
Changpeng Zhao, a Canadian known in the industry as CZ, founded Binance in 2017. He raised money for it by selling a new digital token called BNB. Between late June and early July that year, Binance sold 100 million BNB at an average of 15 cents each and raised about $15 million, according to a lawsuit later filed against the company by the US Securities and Exchange Commission (SEC), the country’s regulator. The exchange opened for trading in July.
From the start, Binance went after big traders, including Americans. It quickly became the world's largest crypto exchange, and more of its customers came from the US than from any other country, according to court filings in the 2023 criminal case to which Binance pleaded guilty.
Zhao never gave the company a fixed headquarters. "Wherever I sit is the Binance office," he once said, according to the SEC's lawsuit. The company that runs the exchange, Binance Holdings, was registered in the Cayman Islands, the SEC said, and Binance operates through affiliates in several countries.
Its most valuable customers were high-volume traders it called VIPs. They generated a large share of Binance's trading and revenue, and their constant buying and selling made it easier for other customers to find someone to trade with, the court filings show.
In 2019 Binance said it would stop serving Americans and launched a separate exchange for them, named Binance.US. An internal presentation that year estimated that Binance.com still had more than 1.47 million US customers, the SEC alleged. Between August 2017 and October 2022, US users traded trillions of dollars on Binance and earned it more than $1.6 billion in profit, according to the US Justice Department, which prosecuted the company.
By late 2023 Binance handled about 60% of spot trading on centralised crypto exchanges, the US Treasury estimated when it announced its own penalties against the company that year. Spot trades are purchases and sales settled straight away, as opposed to bets on future prices. Binance has 335 million registered users and held about $162.8 billion of their assets, according to its 2025 annual report.
Operations
An exchange brings buyers and sellers together and takes a cut. Binance's software, called MatchBox, pairs buy and sell orders automatically. Neither side learns who is on the other end, according to the SEC lawsuit.
Binance makes most of its money from trading fees, typically between 0.015% and 0.2% of each spot trade, plus fees for withdrawals and for trading with borrowed money, the lawsuit said. Customers can pay those fees in BNB.
A customer who deposits crypto hands it over to Binance. The exchange pools it with other customers' coins in wallets it controls and records who owns what on its own ledger. A trade between two customers changes only that ledger, and coins move on the blockchain, the shared public record behind each cryptocurrency, only when someone withdraws them.
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Control of the coins rests with whoever holds a wallet's private key, a secret code the SEC compared to a password. Wallets connected to the internet, called hot wallets, are easier to attack than wallets kept offline. The pooling also means that an intruder who gains the power to approve withdrawals can, in principle, move coins belonging to many customers at once.
Binance also keeps an emergency fund for users, set up in 2018, which it says it can draw on in extreme situations. Binance said in 2024 that the fund was generally kept at around $1 billion. It is now held in bitcoin, so its dollar value rises and falls with the bitcoin price.
Admissions
Four US authorities settled with Binance in November 2023 over overlapping conduct. The Justice Department brought criminal charges. Two arms of the Treasury imposed civil penalties: the Financial Crimes Enforcement Network (FinCEN), which polices money laundering, and the Office of Foreign Assets Control (OFAC), which enforces sanctions. The Commodity Futures Trading Commission (CFTC), which regulates derivatives, financial contracts tied to the future price of an asset, brought a civil lawsuit.
The cases rested mainly on two kinds of US rule. An exchange that serves American customers must register with FinCEN, check who its customers are and report suspicious transactions. Americans may not trade with people in countries under comprehensive US sanctions, such as Iran. The CFTC also said Binance offered derivatives to Americans without registering with it.
Binance admitted to breaking both rules. It pleaded guilty to breaking US anti-money-laundering requirements, to violating US sanctions and to running an unlicensed money-transfer business. Zhao pleaded guilty to failing to maintain an effective anti-money-laundering programme and stepped down as chief executive.
The company admitted that for years anyone could open an account and trade with just an email address. It began asking customers to prove their identity in August 2021 but let those who had not done so keep trading until May 2022.
Binance never filed a suspicious activity report, the alert US law requires financial firms to send when a transaction looks suspicious. It failed to report well over 100,000 such transactions, including ones linked to Al Qaeda, the Islamic State, ransomware attacks and websites selling child sexual abuse material, the Treasury said.
After announcing it would block Americans, Binance worked to keep its biggest US traders. Executives including Zhao planned to help VIPs open accounts in the name of offshore companies, and staff called US VIP clients to encourage them to give information suggesting they were not in the US. Zhao told employees it was "better to ask for forgiveness than permission", according to the court filings.
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Binance's matching system also paired American users with users in countries under US sanctions. Between January 2018 and May 2022, Binance caused more than $898 million in trades between US users and users in Iran, the Justice Department said.
The company agreed to pay about $4.3 billion to the Justice Department, $3.4 billion to FinCEN, $968 million to OFAC and $2.7 billion to the CFTC. The amounts overlap, as the Justice Department counted about $1.8 billion of its penalty towards the other three. In addition, Binance had to accept an independent monitor, an outside overseer who checks that it follows the rules, for three years under the Justice Department deal, and five years of monitoring by FinCEN.
Binance said at the time that the settlements acknowledged its responsibility "for historical, criminal compliance violations, and allow our company to turn the page", Reuters reported.
Zhao was ordered to pay the CFTC $150 million, and prosecutors agreed that what he paid the CFTC would count towards his $50 million criminal fine. In April 2024 a federal judge in Seattle sentenced him to four months in prison, well short of the three years prosecutors had sought. He was released that September.
The dropped SEC lawsuit
The SEC brought a separate civil lawsuit against Binance, Zhao and the company that runs Binance.US in June 2023, with 13 charges. Its central claim was that Binance had operated as a securities exchange, broker and clearing house, the middleman that settles trades, without registering as any of them, and had sold its own products, including BNB, as unregistered securities.
The SEC also alleged that Binance secretly let high-value US customers keep trading on its main exchange, secretly controlled Binance.US, and mixed and moved customers' assets as it pleased, including to a trading firm Zhao owned.
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Binance said the SEC had sued "after extensive cooperation and recent good-faith negotiations", and that "the SEC's real intent here, instead, appears to be to make headlines". It said it would "vigorously defend our business and the industry". Binance.US called the lawsuit "baseless".
The case never went to trial. In May 2025 the SEC dropped it permanently, saying dismissal was appropriate "as a policy matter".
The pardon, and India
President Donald Trump pardoned Zhao in October 2025, with the White House press secretary saying that the founder had been prosecuted by the Biden administration "in their war on cryptocurrency". Zhao no longer runs Binance but remains its largest shareholder, Bloomberg reported.
In India, the Financial Intelligence Unit (FIU-IND), the finance ministry's anti-money-laundering agency, fined Binance ₹18.82 crore in June 2024 for serving Indian customers without meeting its obligations under the Prevention of Money Laundering Act. Binance had registered with the agency the month before, after the government blocked its websites in India, a senior officer told PTI at the time.
