FTC v. Binance: How Big Is Binance's Presence in the United States?

V. FACTS

D. Binance’s Presence in the United States

72. Throughout the Relevant Period, Binance has maintained significant ties to the U.S. financial system and economy and has actively solicited customers in the United States through its marketing efforts including on numerous social media applications such as Twitter.

73. Binance has employed at least 60 people in the United States, and that number continues to increase.

Among Binance’s U.S.-based employees are compliance and investigations personnel; personnel involved with Binance’s private equity arm, known as “Binance Labs”; a key employee who managed the business unit that was responsible for “Binance’s official crypto wallet,” a product Binance has offered called “Trust Wallet”; in-house lawyers; and Binance’s current “Chief Strategy Officer.”

74. During the Relevant Period, Binance has enlisted U.S. residents to act as “Binance Angels” to solicit and interact with U.S. customers. Generally, Binance Angels attempt to recruit new customers to Binance, answer questions from customers and prospective customers, and test new Binance features.

In return, Binance Angels receive benefits such as invitations to events and Binance swag.

75. From Binance’s early days, Zhao has known that U.S. customers trade on the platform. Zhao has personally interacted with Binance’s U.S. customers.

For example, in 2017, and in connection with Binance’s early phase of targeting U.S. customers, Zhao provided instructions to a U.S. resident with respect to an English-language customer support channel over the Telegram messaging application.

Later, on January 8, 2018, a U.S. trading firm emailed Zhao directly to onboard to Binance, identified the owner of the company as a U.S. citizen, and provided the company’s owner’s U.S. passport and Illinois driver’s license to Zhao.

76. Zhao, Lim, and other Binance senior management have known that U.S. customers trade on Binance and have tracked and monitored their activities for multiple purposes. For example, Zhao has received periodic reports concerning the nature and geographic location of Binance’s customers as well as the sources of Binance’s revenue.

These reports contain information about Binance’s U.S. customers and the effectiveness of Binance’s efforts to capture the U.S. market.

77. An example of a periodic report that contains information about Binance’s sources of revenue is titled August [2019] Financial Reporting Package.

The August Financial Reporting Package breaks downs Binance’s trading revenue by base asset (with BTC-related transactions comprising 44% of Binance’s revenue for that month), and trading volume, among other metrics.

One slide on the August Financial Reporting Package is titled “Trading Revenue by Country” and displays Binance’s focus on the geographic sources of its revenue, including the 16% for that month (and 19% for July 2019) that Binance attributed to customers located in the “US” as shown here:

78. Binance officers, employees, and agents have interacted with U.S.-based institutional customers at Binance-hosted networking and social events in the United States at various times during the Relevant Period, including an April 2022 party in Las Vegas to which Binance invited its “largest accounts” such as “top heavy weights of hfts, prime brokerage, [and] vcs,” and a networking event in Austin, Texas.

Binance and Zhao have also participated in numerous digital asset industry conferences in the United States.

79. During the Relevant Period, Binance has procured professional services from U.S.-based law firms, compliance consultants, and other vendors concerning various aspects of its business operations. For example, Binance relies on the Google suite of products for information management and email services.

Binance uses Webex for its internal messaging functionality. Binance leases office space from WeWork that it makes available to its U.S.- based employees and other personnel. Binance has entered into long term contracts with Amazon Web Services, a United States company headquartered in Washington.

Among the services Binance purchases from Amazon Web Services that are provided to Binance in the United States is “AWS CloudFront,” which according to Amazon Web Services is a “Global content delivery network.” Zhao has paid for certain of Binance’s Amazon Web Services accounts using his personal credit card.

80. Binance avails itself of the U.S. legal system to seek protection for its intellectual property. For example, Binance Holdings filed trademark applications for “Binance”; “Binance Chain”; and “Binance DEX” with the assistance of U.S. attorneys. These U.S. trademarks remain active.

81. In 2019, Zhao and BAM Trading launched Binance.US, a digital asset spot market trading platform that offers its services to U.S. customers. When he hired BAM Trading’s first CEO, Zhao described Binance as a pirate ship and explained that he wished for Binance.US to be a navy boat.

BAM Trading is under common ownership and control with Binance and continues to operate the Binance.US spot platform. Binance personnel, including Zhao, have dictated Binance.US’s corporate strategy, launch, and early operations.

At Zhao’s direction, Binance.US’s marketing and branding has mirrored that of Binance.com. BAM Trading has licensed Binance’s trademarks to advertise in the United States. Binance.US has also relied on one of Binance’s matching engines through a software licensing agreement.