Binance.US Raises About $200 Million at $4.5 Billion Valuation

Yueqi Yang, Bloomberg News

The Binance Markets Ltd. cryptocurrency exchange trading app arranged on a smartphone in London, U.K., on Monday, June 28, 2021. Binance Markets Ltd., an affiliate of top global crypto bourse Binance, was told by the Financial Conduct Authority it has until the evening of June 30 to confirm it has removed all advertising and financial promotions, according to the authority’s register. Photographer: Jason Alden/Bloomberg , Bloomberg

(Bloomberg) -- Binance.US, the American affiliate of the largest global cryptocurrency exchange, has raised more than $200 million at a valuation of $4.5 billion, the first external funding since its inception about two years ago.

Investors include Circle Ventures, VanEck and Foundation Capital, Binance.US said Wednesday in a statement. Gold House, which focuses on combating anti-Asian hate, and Gaingels, which supports LGBTQ causes, also joined the round.

The fundraising comes as its bigger competitors, such as Coinbase Global Inc and FTX, have ramped up advertising to gain U.S. market share. Binance.US plans to use the funding for its first marketing push, while expanding products and services, potentially through M&As. It plans to emphasize low-cost crypto trades.

“When you look at Coinbase retail users, on average, they are being charged 1.5%, sometimes up to 3%. For the same users transacting and trading on Binance.US, we are charging 0.1%,” Binance.US Chief Executive Officer Brian Shroder said in an interview. “We are going to educate people on these price differences.”

Shroder, a former executive at Ant Group Co., met Changpeng Zhao, the founder and CEO of Binance Holdings Ltd., when the two explored an unrealized partnership between their companies.

He was promoted to the CEO of Binance.US last October, after Brian Brooks, a U.S. comptroller of the currency during the Trump administration, abruptly resigned from the job months into his tenure.

Shroder said in September that he foresees an IPO in the next two to three years. Binance.US, which is available in 45 states, gets about 70% of trading volume from institutions. Retail investors, who pay higher fees, contribute the majority of revenue.

Binance.US is operated separately from Binance.com, licensing trading technology from the global arm. The U.S. entity has been on a hiring spree, especially for risk and compliance staff.

“Regulation is an opportunity for us,” Shroder said. “This is the first time we are going out and speaking to regulators with our own voice” separate from Binance.

He declined to comment on a February Wall Street Journal report of a probe by the Securities and Exchange Commission of the exchange and two trading firms with ties to Binance’s founder.

“We are very focused on establishing and building on regulatory discussions, whether at state, federal, or local levels,” Shroder said.