Head of biggest crypto exchange Binance says regulations are needed but can’t protect people from a ‘bad player’
The chief executive of Binance, the world’s largest cryptocurrency exchange, has said he is in favour of closer regulation of the crypto industry but that laws cannot protect anyone from a “bad player”.
Changpeng Zhao, known as CZ, told the B20 business conference in Bali, which coincides with the G20 summit, that the crypto industry itself also “collectively has a role to protect consumers”.
His remarks follow the spectacular collapse last week of FTX, formerly the seventh-biggest crypto exchange.
Role of regulation
Zhao had at times traded barbs via Twitter with FTX chief executive Sam Bankman-Fried, with one apparent source of tensions between the two being Bankman-Fried’s lobbying efforts in Washington, where he spent millions to push for tighter cryptocurrency industry regulations.
“We won’t support people who lobby against other industry players behind their backs,” Zhao wrote in a recent Twitter post, without referring directly to Bankman-Fried.
Last week Binance at one point briefly said it would acquire FTX in order to resolve the company’s liquidity issues, before pulling out of the deal days before FTX filed for bankruptcy on Friday.
Bankman-Fried was seen as seeking to bring cryptocurrency into the financial mainstream through regulation, testifying before Congress on the issue, while Binance has been the subject of regulatory probes in multiple countries.
However, the collapse of FTX leaves Binance as by far the biggest company in an industry that has been rocked by multiple, high-profile collapses over the past few months.
Asked about the role of cryptocurrency regulation, Zhao said, “We do need to increase the clarity of regulations and the sophistication of regulations in the crypto space.”
But he added that, “No one can protect [from] a bad player, to be very frank, if a guy is very good at lying and is very good at… just pretending to be what he’s not, [if] somebody wants to violate the law, the law is not going to prevent that.” He did refer directly to Bankman-Fried or FTX.
Zhao said Binance would be “leading the way” to show proof of its reserves, similar to smaller rivals such as Crypto.com, OKX and Deribit who have also promised to publish audited reports showing that their reserves match their liabilities to customers.
FTX’s collapse has spurred a fresh round of crypto investor sell-offs, with Bitcoin falling more than 20 percent over the past week to around $16,000 (£13,600), compared to an all-time high of more than $65,000 exactly a year ago, on 14 November 2021.
The Financial Times reported over the weekend that at the time of its collapse FTX had only $900m in easily sellable, or liquid, assets as against $9bn in liabilities.