Binance CEO expects more regulatory scrutiny following FTX implosion Binance CEO expects more regulatory scrutiny following FTX implosion
CZ stated that the FTX implosion has set the industry back a few years considering the size of the exchange to the industry.
2 min read
Updated: Oct. 9, 2023 at 4:41 pm UTC
Web Summit / CC BY 2.0 / Flickr. Remixed by CryptoSlate
Binance CEO Changpeng Zhao said his firm backed out of the FTX deal because it did not make sense and the huge financial hole they would have had to cover.
Speaking at the Indonesia Fintech Summit on Nov. 11, CZ said Binance already covers most of the markets that FTX.com operates in. Apart from that, his exchange has more customers than its embattled rival.
CZ stated that the FTX implosion has set the industry back a few years considering the size of the exchange to the industry.
The Binance CEO also referenced the regulatory scrutiny FTX has drawn as one of the reasons it dropped the deal.
Reports have revealed that US agencies were investigating FTX’s handling of customer funds and lending activities.
Meanwhile, Sam Bankman-Fried took a slight dig at Binance in a leaked slack message, saying the CZ-led exchange did not plan to complete the deal.
CryptoSlate research revealed that FTX and Alameda Research had used Binance as an unsuspecting intermediary in siphoning funds from each other.
CZ predicts more regulations for crypto exchanges
Zhao predicted that regulators would expand their scrutinies into crypto exchanges following FTX’s fallout.
According to CZ, regulators should shift their focus away from just know-your-customer (KYC) and anti-money laundering (AML) laws, but also to how the exchange operates. He said:
“(Regulators have) to focus more on the exchange operations …business models, proof-of-reserves”
CZ added that his firm would also look to educate regulators on how to audit crypto exchanges.
“We also want to educate regulators all around the world -how do you do audits on crypto exchanges, not just KYC or AML, which is important, but how do you check cold wallets? How do you use balance reconciliations? How do you check transaction logs? How do you use on-chain monitoring tools to do this?”
Crypto exchanges like Binance, Crypto.com, KuCoin, Huobi, etc., have been forced to reveal their proof-of-reserves in a bid to regain retail users’ trust.
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Oluwapelumi Adejumo
Oluwapelumi values Bitcoin's potential. He imparts insights on a range of topics like DeFi, hacks, mining and culture, underlining transformative power.
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Bitcoin, a decentralized currency that defies the sway of central banks or administrators, transacts electronically, circumventing intermediaries via a peer-to-peer network.
FTX
FTX is a defunct cryptocurrency exchange, currently in bankruptcy proceedings, that was founded by Sam Bankman-Fried and Zixiao “Gary” Wang in May 2019.
Binance
Binance is a global cryptocurrency exchange that provides a platform for trading more than 100 cryptocurrencies.
Sam Bankman-Fried is the former CEO, and co-founder of defunct crypto exchange FTX and Alameda Research.
Changpeng Zhao, popularly known as “CZ,” is a notable figure in the cryptocurrency world, primarily for founding and leading Binance, the world’s leading cryptocurrency exchange by trading volume.