Binance, a leading cryptocurrency exchange founded in 2017 by Changpeng Zhao, has become a prominent platform for trading various digital assets. For instance, Binance was originally founded in China before moving to Malta to escape Chinese government regulations. Today, it provides trading on more than 350 different cryptocurrencies, including popular ones like Bitcoin and Ethereum as well as its own Binance Coin (BNB). While boasting advanced security measures and a user-friendly interface, Binance has faced both security breaches and regulatory challenges, testing its resilience and commitment to user protection.
To get around the illegality of that in the United States, Binance runs a separate but related entity, Binance US. This division has less functionality and tokens available than the worldwide platform. Strict regulatory restrictions enacted in 2019 severely limit choices for US citizens. Consequently, Binance US is now the only legal option for Americans who wish to access the exchange’s services.
Though it has skyrocketed in popularity, Binance has a troubled history of being hacked. In late 2022, the BNB Chain suffered through a god awful $570 million exploit. Previously, in 2019, the exchange suffered a heavily $40 million Bitcoin hack. To protect users from the inevitable incidents that will come with such rapid growth, Binance has a Secure Asset Fund for Users (SAFU). This fund would be set up to provide direct reimbursement to users in the case of a breach.
Security is a top priority for Binance, and they take extensive precautions to protect user assets. These finish up with RSA keys for trading API, IP address limitations, wallet address whitelisting, anti-phishing codes, and two-factor authentication (2FA). The exchange utilizes cold wallet storage to safeguard the majority of funds offline, coupled with real-time monitoring, access control, and data encryption. The Binance Wallet includes encryption, 2FA, and private key control, creating a very secure environment for holding cryptocurrency.
Despite this potential, Binance had faced its own share of regulatory challenges in many countries, most notably the USA, UK and Japan. As a result, in 2023, the U.S. Securities and Exchange Commission (SEC) responded by filing a lawsuit against Binance. They charged the exchange with deceiving investors regarding risk management features and conducting abusive wash trading. A month later, Binance reached a $4.3 billion settlement with the U.S. Department of Justice. They settled with the CFTC and FinCEN for illegal anti-money laundering practices.
Binance US adopts the same security practices as its global version, with features such as 2FA, cold storage and data encryption. Yet, unlike its parent company, there is no explicitly stated SAFU equivalent for Binance US. However, it does enjoy the full weight of Binance’s security infrastructure. It relies heavily on platform security protections such as cold storage, rather than federal insurance, to safeguard user funds.
