At TechCrunch Sessions: Crypto 2022, Changpeng Zhao, the co-founder and CEO of Binance, made a comment regarding the demise of FTX. He downplayed his own contribution to the chain of events that finally resulted in FTX declaring bankruptcy.
“I still don’t believe that I have that much sway. We may have been the straw that broke the camel’s back, in my opinion. It’s not a very sturdy straw, he told Anita Ramaswamy of TechCrunch. There was a lot of preparation leading up to it. It’s possible that I was the final thing to push it.
He reiterated a handful of the worries that he has previously voiced over the last several days. Although CZ thinks the collapse of FTX is a bad thing in the short term, it will be good in the long run.
“Many people are seriously suffering financially; they have funds that are frozen on FTX, etc. That will seriously undermine the industry’s credibility and sense of security, according to CZ. “We’ll need to undertake a lot more education. We do need to greatly boost company transparency. That in and of itself is most likely advantageous.
CZ made numerous attempts to set Binance apart from FTX by claiming that they are two completely different exchanges by design. But what distinguishes Binance?
We’re fine, we still have a successful business today, CZ stated. The amount of money that [FTX] lost, the volume of customer cash moved, and the situation there all caught me off guard.
However, Binance still relies heavily on the transaction fees from its primary cryptocurrency exchange. Approximately 90% of Binance’s revenue, according to CZ, comes from that activity. And it fluctuates significantly based on the price of bitcoin.
If the crypto winter persists for a longer period of time than anticipated, Binance may start making money from its other services, such CoinMarketCap and Trust Wallet.
“When we bought CoinMarketCap, their monthly ad revenue was $3 million. There are no banners or pop-ups because we got rid of all the adverts, CZ added. “The experience is lot cleaner now. But we can restart that. We’ll get $40 million a year from that. But today, we don’t have to. To hasten acceptance, we offer several of our items without charge. But we could make money off of those if we wanted to.
The fact that Binance also has its own coin, BNB, is the second issue with Binance. Concerns over the value of FTX’s own token FTT were the first cause of the company’s downfall.
Fair point, however we have documentation of our reserves and are collaborating with authorities and auditors. We want to be as open as we can. Compared to FTX, our situation is significantly different, CZ stated.
The fund for industrial recovery
Changpeng Zhao also discussed his intentions to launch an industry recovery fund during the conversation. The fund seems to still be very much a work in progress.
It isn’t fixed in stone. Numerous figures have been mentioned. I don’t know if $2 billion is enough or too much; I’ve seen amounts around that amount,” he remarked.
Nearly every initiative you read about in the news will have contacted us.
The fund may seem like a humanitarian endeavour, but Binance is approaching it from a financial perspective. There are numerous ways to receive recompense. We can request other things or seek for equity,” CZ stated. In the event that open source initiatives are underfunded, Binance may be able to assist them. It would be conventional grants in that instance.
Genesis stopped processing customer withdrawals for its institutional clientele doing business with Genesis Global Trading yesterday. Their website lists a total of $2.8 billion in active loans.
Could the industry recovery fund of Binance provide some assistance to Genesis. “I can’t speak to individual transactions. NDAs would probably be in place, however there are a lot of initiatives that we are considering. Almost every project you read about in the news will have contacted us, according to CZ.
Rebuilding trust will require a lot of work in the future. Undoubtedly, CZ said that Binance had a 100% reserve for user assets. However, in light of recent remarks made by Sam Bankman-Fried, the former CEO of FTX, a simple statement like that is no longer sufficient.
“Publicating a cold wallet address is a transitory, transient solution. It does not imply that you are completely guaranteed. And as we have observed in some instances, when things don’t add up, it actually raises more doubts, according to CZ. “How safe is the infrastructure of the wallet? Which technologies are used by your custody solution? How do you resolve conflicts with customers? Which circumstances result in user compensation and which do not?
Naturally, he thinks Binance is a cutting-edge exchange in regards to all of those issues. “And we actually want to share a lot of things so that they become standards for the industry, like how we manage wallets. For handling wallets, I believe we have one of the most secure technologies. The biggest wallets in the world are also managed by us,” he added.
Many individuals think that FTX’s demise will result in increased decentralization. FTX was a single point of failure in such situation. Because of the concentration, many users suffered financial losses.
CZ does not, however, consider that to be an existential threat. He asserts that the cryptocurrency sector will always contain both centralized organizations and decentralized technologies.
Today, he claimed, “everyone in the world who doesn’t have crypto is not technically capable of holding crypto on their own.” Therefore, most of them will lose their own money if we just force people to go from banks directly to DeFi because they misplaced it, lost their keys, didn’t know how to encrypt it, etc. The best way to expand the industry is not by doing that.