Binance launches 'Capital Connect' platform for VIP users

Crypto exchange Binance has launched a new service platform for VIP users to connect them with investment fund managers. Called Capital Connect, the platform will facilitate connections between eligible users and asset managers.

Binance has nine levels of VIP users or high-net-worth customers, and all of them are eligible to join the Capital Connect platform, the company said.

There was high demand for such a platform, Catherine Chen, head of Binance VIP and Institutional, told The Block in an exclusive interview. Chen said the exchange had seen a "very rapid growth of the non-trading type of investors in the past 12 months or so" who don't want to trade crypto on their own but are looking to engage with active fund managers to park their capital — and that's how Capital Connect was born.

Capital Connect is free 

Binance won't charge any fee or commission for providing the Capital Connect platform, but the company will ultimately benefit from it, according to Chen. "Typically, these investment managers, where do they trade? They obviously trade on the platform that offers some of the deepest liquidity. So ultimately, we stand to gain," Chen said.

Binance is taking a page from the traditional finance book to offer the platform. Chen said such platforms had been there in the TradFi space for decades, giving an example of Edgefolio. But she said Binance's platform is the first of its kind in the crypto space and would aim to be "more efficient and address pain points" of high net worth clients.

Binance's over 128 million customers

Binance has over 128 million users, and VIP clients "represent a very small percentage" of the overall user base. However, "they do contribute very significant volume or activity across our different product lines," Chen said.

Binance won't do due diligence on fund managers listed on the Capital Connect platform but will permit "only very high-quality" managers, Chen said. They will also have to complete Binance's verification checks, she said, adding that the verification process applies to all users.

Like Binance's main exchange platform, Capital Connect won't be available for users in the United Stattes and other restricted countries, Chen said.

Binance lawsuit

Binance continues to serve its millions of customers and launch new products and services despite recent lawsuits from U.S. regulators. Just yesterday, Binance announced its NFT marketplace would add support for Ordinals, or Bitcoin NFTs.

Binance and its co-founder and CEO, Changpeng "CZ" Zhao, were sued by the U.S. Commodity Futures Trading Commission in March for allegedly operating an "illegal" exchange and a "sham" compliance program. Zhao, at the time, called the suit "unexpected and disappointing" and said they "do not agree with the characterization of many of the issues alleged in the complaint."