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News Report

Has Binance Bitten off More Than It Can Chew With Its Plans for Global Dominance?

2 mins
Updated by Geraint Price

In Brief

  • Binance chief executive Changpeng Zhao said the company intends to invest in other industries to facilitate the integration of cryptocurrencies.
  • Although Zhao said he doesn’t wish to create a conglomerate, Binance has already come to dominate the crypto exchange industry.
  • While purporting to be exclusively interested in developing crypto markets, some of Zhao’s actions and comments have others speculating.
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As Binance expands with acquisitions and consolidates its market dominance, some wonder at the extent of CEO Changpeng Zhao’s ambitions.

Zhao said in a recent interview that Binance is looking to expand into traditional markets through a series of acquisitions. He said the company is actively searching for a handful of companies across different economic sectors to bring into crypto. Zhao said that integrating cryptocurrencies into even a single firm could stimulate others in the industry to do the same.

Binance initiated the first part of this strategy with a foray into publishing earlier this year. The $200 million it invested in business magazine Forbes earned it a pair of seats on the century-old periodical’s board. Now, Binance has additional industries in mind, some of which have immediate use-cases for crypto like retail, e-commerce and gaming.

Yet, in spite of the expansionist rhetoric, Zhao said the aim is not to build Binance up into a “conglomerate.” The chief executive rather envisions developing infrastructure through which to integrate cryptocurrencies into legacy enterprises. “The strategy is about making the crypto industry bigger,” Zhao said.

Binance Market Dominance

However much Zhao downplays Binance’s growth plans, there is little denying that the exchange has come to dominate the industry. Registered in the Cayman Islands, the exchange’s 24-hour trading volume came in at just over $13 billion, according to CryptoCompare. Additional data revealed that at $500 billion, its cryptocurrency spot trading volumes in Jan. more than quadrupled its closest competitor.

Binance’s dominant market position has become all the more prominent with the collapse of rival exchange FTX. A short-lived deal to acquire FTX would have reportedly given Binance an 80% share of the global crypto exchange market. Nevertheless, following FTX’s bankruptcy Binance proceeded to put forward a bid to acquire assets previously designated to the rival exchange.

Zhao’s Ambiguous Ambitions

In light of the downfall of FTX’s Sam Bankman-Fried, Zhao has been lauded as the “white knight” of the crypto industry. He announced that Binance would launch an industry recovery fund to support firms affected by FTX’s collapse. 

Yet, the Binance chief executive does not emerge from the picture above reproach. It was his announcement that Binance would be selling its FTX tokens that triggered the ensuing liquidity crisis and bankruptcy. Some believe he had done this to intentionally sabotage FTX, including Bankman-Fried himself. 

The FTX founder had implied so in Tweets following his exchange’s demise, suggesting that his “sparring partner” had emerged victorious. Zhao responded to the implication saying, “I think only a psychopath can write that tweet”. In addition to FTX, Zhao has been known to make critical comments about the conduct of other exchanges.

In a series of Tweets that were subsequently deleted, Zhao cast doubts on the Bitcoin reserves of rival exchange Coinbase. While Coinbase CEO Brian Armstrong refuted these claims with public data, other industry commentators were displeased with Zhao’s apparent antagonism. Effectively rescinding these comments, Zhao said he’d been corrected by Armstrong, adding, “let’s work together to improve transparency in the industry.”


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