The head of the world’s largest cryptocurrency exchange has said after the collapse of rival FTX that no one can be protected from a “bad player” and announced plans for an industry ‘‘recovery fund” for struggling crypto firms.
Changpeng Zhao, the founder and chief executive of Binance, said it was not “100%” the responsibility of watchdogs to protect consumers and the crypto sector had to play its own part. However, he said preventing a rogue figure from evading regulators was difficult.
“No one can protect [from] a bad player, to be very frank, if a guy is very good at lying, and 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. The law can help to reduce that,” Zhao said, speaking on Monday at the B20 business summit in Bali.
Zhao did not refer to the founder of FTX, Sam Bankman-Fried, in his comments but was responding to a question about regulation after the FTX collapse.
The FTX group, a top five cryptocurrency exchange before its implosion, filed for bankruptcy protection in the US on Friday. The Financial Times reported at the weekend that FTX had $9bn (£7.65bn) of liabilities and $900m in liquid assets – those it could easily sell – when it collapsed.
Zhao also announced on Monday plans for an “industry recovery fund” to help crypto firms that are illiquid, or struggling to sell assets in a volatile market.
“To reduce further cascading negative effects of FTX, Binance is forming an industry recovery fund, to help projects who are otherwise strong, but in a liquidity crisis,” he wrote.
Before its collapse, FTX had performed a lender-of-last-resort role for crypto firms that were struggling after a marked decline in the digital asset market since November last year – a period over which the collective value of crypto assets fell from $3tn to less than $1tn.
Hours before FTX collapsed last Friday, BlockFi, a crypto lender, said it was pausing customer withdrawals due to the FTX situation. FTX had bailed out BlockFi in June with a $250m loan, a week after Bankman-Fried’s company had loaned almost $500m to the struggling crypto broker Voyager Digital.
Speaking in Bali, Zhao repeated calls for crypto regulation. Bankman-Fried had been lobbying on the issue in Washington before FTX’s collapse, in a source of apparent tension with Zhao.
“We’re in a new industry, we’ve seen in the past week, things go crazy in the industry,” Zhao said. “We do need some regulations, we do need to do this properly, we do need to do this in a stable way.”
Cryptocurrency exchanges help people buy and sell crypto assets. Cryptocurrencies are based on the same basic structure as their star asset, bitcoin: a publicly available “blockchain” that records ownership without having any central authority in control, a structure that has led to warnings from regulators and central bankers that consumer investments in such assets are highly vulnerable.
Zhao added in his B20 appearance that he was planning to form a new industry association to form common standards for the sector. The crypto industry already has a number of associations including the Blockchain Association in the US.
“One of the things we will do very soon … we will try to collect the other industry players together [and] form an industry association globally, try to deal with some of the common standards in business etc. So as industry players we have a responsibility as well,” Zhao said.
On Monday, the chief executive of the Singapore-based crypto exchange Crypto.com said his firm would prove wrong all those who said the platform was in trouble, adding that it had a robust balance sheet and took no risks.
Kris Marszalek took questions during a livestreamed YouTube address, and also said the platform always maintained reserves to match every coin that customers held on its platform.
“We will just continue with our business as usual and we will prove all the naysayers and there is [sic] many of these right now on Twitter over the last couple of days,” Marszalek said.
“We will prove them all wrong with our actions. We will continue operating as we have always operated. We will continue being the safe and secure place where everybody can access crypto.”
The ask-me-anything session followed multiple tweets at the weekend from investors questioning a transfer of $400m-worth of ether tokens from crypto.com to another exchange called Gate.io on 21 October. Marszalek said the transfer was an error and the ether tokens had been returned to the exchange.
This news is republished from another source. You can check the original article here