Binance

“We were the last straw that broke the camel’s back” • ZebethMedia

By zebethcontrolPosted on November 17, 2022Posted in Binance, Crypto, CZNo Comments

Binance co-founder and CEO Changpeng Zhao, also known as CZ, commented on the collapse of FTX at ZebethMedia Sessions: Crypto 2022. He played down his personal role in the series of events that ultimately led to FTX filing for bankruptcy. “I still don’t think I have that much influence. I think we were the last straw that broke the camel’s back. It’s not a straw that is really strong,” he told ZebethMedia’s Anita Ramaswamy. “There’s a whole bunch of stuff that built up to it. I just may have happened to be the last thing that pushed it.” He repeated some of the concerns that he has already expressed over the past few days. CZ believes the implosion of FTX is a negative event in the short term. But it will have a positive effect over the long term. “Many consumers are really hurt financially, they have money stuck on FTX, etc. That’s going to really shake confidence and credibility in the industry,” CZ said. “We will have a lot more education to do. We do need to increase transparency of our businesses — significantly. That itself is actually probably a good thing.” In many ways, CZ tried to differentiate Binance from FTX, saying that they are very different exchanges by design. But what makes Binance different? “We still run a profitable business today, we’re okay,” CZ said. “I was very surprised by the amount of money that [FTX] lost, and the amount of customer funds they moved, and the state of things there.” But Binance is still very dependent on transaction fees on its main crypto exchange. CZ said Binance generates around 90% of its revenue from that activity. And it changes vastly depending on the price of bitcoin. If the crypto winter lasts longer than expected, Binance could start generating revenue from its other products, such as CoinMarketCap and Trust Wallet. “When we acquired CoinMarketCap, they were making $3 million per month in ad revenue. We removed all ads so there’s no banners, no pop-ups,” CZ said. “It’s a much cleaner experience. But we can turn that back on. That’ll give us $40 million a year. But we don’t need to today. We have many products we provide for free just to increase the speed of adoption. but if we want to monetize those we could.” The second concern with Binance is that Binance also has its own token with BNB. FTX’s demise all started with concerns about the value of FTX’s own token FTT. “Fair concern, but we have proof of reserve and are working with auditors, regulators. We want to be as transparent as possible. We are in a very different situation than FTX,” CZ said. The industry recovery fund During the interview, Changpeng Zhao also talked about his plans to launch an industry recovery fund. It sounds like the fund is still very much a work in progress. “It’s not set in stone. Different numbers have been thrown around. I’ve seen numbers around $2 billion and I’m not sure if that’s enough or too much,” he said. Almost all projects you hear about in the news, they will have talked to us Changpeng Zhao While it sounds like a relief effort, Binance is approaching the fund with a business mindset. “There’s different ways to get compensation. We can get equity or ask for other things,” CZ said. Binance could also help open source projects if they don’t have enough funding. In that case, it would be traditional grants. Yesterday, Genesis halted customer withdrawals for its institutional client base dealing with Genesis Global Trading. According to their website, they have $2.8 billion in total active loans. Could Genesis benefit from some help from Binance’s industry recovery fund. “I can’t comment on specific deals. I would assume that there would be NDAs in place but we are looking at a large number of projects. Almost all projects you hear about in the news, they will have talked to us,” CZ said. Going forward, there is a lot of work to do to rebuild trust. Sure, CZ said Binance has 100% reserve for user assets. But a simple statement like that is no longer enough given FTX’s former CEO Sam Bankman-Fried recent statements. “Publishing a cold wallet address is a short-term temporary method. It doesn’t mean that you’re 100% guarantee. And as we have seen in certain cases, it actually increases the amount of questions when things don’t really add up,” CZ said. “How secure is the wallet infrastructure? What kind of technologies do you use for your custody solution? How do you handle customer disputes? In which situations do you compensate users or not compensate users?” Of course, he believes Binance is a cutting-edge exchange on all those questions. “And we actually would like to share many of them to make them industry standards — like how we manage wallets. I think we have one of the most secure technologies for managing wallets. We also manage the largest wallets in the world,” he said. Many people believe FTX’s collapse will lead to more decentralization. In that case, FTX was a single point of failure. Many users lost some money because of that centralization. But CZ doesn’t necessarily see that as an existential risk. According to him, there will always be centralized entities and decentralized technologies in the crypto industry. “Today, if you ask everybody in the world who does not have crypto to hold crypto on their own, they are not technically capable of doing that,” he said. “So if we just force people to go from banks directly to DeFi, Most of them will lose their own money because they misplaced it, or they lost their keys, or they don’t know how to encrypt it, etc. That’s not the best way to grow the industry.”

Binance chief says crypto exchange doesn’t currently see a viable business in India • ZebethMedia

By zebethcontrolPosted on November 17, 2022Posted in Binance, CoinDCX, Coinswitch Kuber, Crypto, indiaNo Comments

Scores of crypto-focused venture capital firms have raced to India in the past two years, hoping to turn the world’s second largest internet market’s large developer community into a key web3 power house. But what does Changpeng “CZ” Zhao, arguably the most powerful and influential figure in the crypto industry, think about the potential of India? Not much, as of today. “To be honest, I don’t think India is a very crypto-friendly environment,” said Zhao at ZebethMedia Crypto conference Thursday. Zhao is not alone with such grim view about the Indian market. Dozens of investors and startup entrepreneurs I have spoken to have privately shared similar concerns, but Zhao’s comment is remarkable because nobody else with such stature has publicly expressed such view. Zhao blamed the country’s high tax environment for making the market not so viable for global players. “If you are going to tax 1% on each transaction, there is not going to be that many transactions,” he said. To be sure, Binance, by far the world’s largest crypto exchange by volume, is operational for users in India. “A user could trade 50 times a day and they will lose like 70% of their money. There is not going to be any volume for an order book type of exchange. So we don’t see a viable business in India today. We just have to wait. We are in conversation with a number of industry associations and influential people and trying to put some logic there,” he said, adding that charging a high tax on each transaction is resulting in lower tax accumulation broadly. “We are trying to get this message across, but tax policies typically take long time to change,” Zhao cautioned. “Binance goes to countries where regulations are pro-crypto and pro-business. We don’t go to countries where we won’t have a sustainable business — or any business, regardless of whether or not we go.” Zhao dismissed any concerns that the firm is seeing less potential in India because of the troubled deal deliberations with local exchange WazirX. India enforced a law earlier this year for taxing virtual currencies. It is taxing income from the transfer of any virtual assets at 30%. To capture details of all such crypto transactions, New Delhi is taking away a 1% tax deduction at source on payments made related to purchase of virtual assets. The nation’s move, alongside the market downturn, has brutally wiped the transactions local exchanges CoinSwitch Kuber, backed by Sequoia India and Andreessen Horowitz, and CoinDCX, backed by Pantera, observe on their platforms. WazirX was processing volumes of about $500 million a day during the peak crypto bull cycle of last year. The figure had dropped below $5 million as of a month ago, according to a person with direct knowledge of the matter. Other global exchanges have attempted to make a push in India. Coinbase, which has backed both CoinDCX and CoinSwitch Kuber, launched its crypto platform in the country earlier this year but quickly rolled back the service amid regulatory scare. Coinbase co-founder and chief executive Brian Armstrong said in May that the firm disabled Coinbase’s support for local payments infra UPI “because of some informal pressure from the [central bank] Reserve Bank of India.”

Binance’s CEO isn’t sweating the FTX implosion • ZebethMedia

By zebethcontrolPosted on November 14, 2022Posted in Binance, Crypto, EC Cryptocurrency, EC News Analysis, FTX Bankruptcy, ftx binance, StartupsNo Comments

The crypto market is trying to pick up the pieces after it was thrown into massive disarray last week when the previously third-largest crypto exchange, FTX, imploded and filed for bankruptcy. “It’s obvious that people are jittery, interested and somewhat nervous about what’s happening in the industry,” Changpeng ‘CZ’ Zhao, CEO of the largest crypto exchange Binance, said during a Twitter Space on Monday. “I want to say, short-term it is painful. But, I think this is good for the industry long-term.” Zhao acknowledged that a lot of people lost money recently and many still have money stuck with FTX, so “there will be pain.” But he hinted that market conditions should improve down the line. “The industry is not going away and the other strong industry players are now even stronger,” he said. Last week, a number of crypto exchanges, including Binance, Crypto.com, KuCoin and OKX said they would begin publishing proof-of-reserves in an effort to reassure customers and investors that their funds are safe in the wake of the FTX debacle. Last week, Zhao emphasized the importance of transparency, tweeting, “All crypto exchanges should do merkle-tree proof-of-reserves.” Proof-of-reserves (PoR) are independent audits by third parties that aim to provide transparency and evidence that a custodian holds the assets it claims to own on behalf of its clients. These exchanges join other crypto businesses like Gemini, BitGo, and Paxos, to name a few, which have used PoR for many years to prove billions of dollars in value, Sergey Nazarov, co-founder of Chainlink, told ZebethMedia on Friday. “Now we’re increasing transparency in the industry, we’re increasing security in the industry, and we’re increasing communications with regulators all around the world,” Zhao said today. “I think five years later, when we look back at this, the industry will be stronger.”

Can proof-of-reserves prevent future crypto exchange collapses? • ZebethMedia

By zebethcontrolPosted on November 11, 2022Posted in Binance, Chainlink, Crypto, crypto ecosystem, crypto exchanges, EC Blockchain, EC Cryptocurrency, FTXNo Comments

A number of crypto exchanges are rushing to publish proof-of-reserves in a seeming attempt to reassure investors their funds are safe as fellow exchange FTX melts down. Proof-of-reserves (PoR) are independent audits by third parties that aim to provide transparency and evidence that a custodian holds the assets it claims to own on behalf of its clients. Auditors then aggregate balances into something called a Merkle tree, which entails all client balances. FTX exploded this week following a CoinDesk report that showed a June 30 balance sheet of its affiliate trading firm, Alameda Research, was largely made up of FTX’s native token, FTT. This all could have been avoided with PoR, Sergey Nazarov, co-founder of Chainlink, said to ZebethMedia. “There was a balance sheet issue and it became known to many depositors all at once,” Nazarov said. “And because it was a surprise, there was a bank run that led to insolvency.” But imagine if depositors knew what FTX and Alameda Research’s balance sheets were from the beginning.

RIP to FTX? • ZebethMedia

By zebethcontrolPosted on November 11, 2022Posted in Binance, Crypto, FTXNo Comments

Image Credits: ZebethMedia We had to talk about the news that rocked the crypto world this week in our Thursday episode: the Binance/FTX deal that never was. To begin, we gave you a rundown of WTF just happened with the beef between two of the largest crypto exchanges in the world and how Sam Bankman-Fried’s storied exchange fell so far so fast, bringing down investors, cryptocurrencies and other companies in the space tumbling down with it. Welcome to Chain Reaction, where we unpack and explain the latest in crypto news, drama and trends, breaking things down block by block for the crypto curious. You can listen to the episode below: Once we ran through the background behind the situation that’s been unfolding in real-time this week, we shared our thoughts on the massive implications this fiasco might have for the rest of the crypto industry, from venture capitalists and startups to regulation across the globe. It’s a fascinating backdrop for our conversation at our crypto event in Miami next week, where we’ll be chatting with Binance CEO Changpeng Zhao (CZ), the billionaire who is seen as the catalyst for FTX’s downfall. You can use the promo code REACT for 15% off a General Admission ticket to the event to hear from CZ and plenty of other crypto market players about what the future of this tumultuous industry might hold in the coming months. Chain Reaction comes out every Tuesday and Thursday at 12:00 p.m. PT, so be sure to subscribe to us on Apple Podcasts, Spotify or your favorite pod platform to keep up with the action.

Sam Bankman-Fried says Alameda Research to wind down trading, FTX attempting to raise capital • ZebethMedia

By zebethcontrolPosted on November 10, 2022Posted in Alameda Research, Binance, Crypto, FTXNo Comments

Sam Bankman-Fried said on Thursday that he will be winding down his trading firm Alameda Research, and is attempting to raise liquidity for the troubled FTX International exchange, as he scrambles to keep the world’s second largest crypto exchange alive after a bailout deal with Binance failed earlier this week. Bankman-Fried said he is engaging with a “number of players” and discussions are at various stages including letter of intents and termsheets. He also said that FTX’s U.S. business is “fine” and “100% liquid.” The 30-year-old entrepreneur, hailed as a wunderkind, said he assumes all responsibility for the mess FTX’s at and any raise for FTX International unit will be first used to do right by the customers. (Developing story)

Some crypto VCs see decentralization as the future following FTX collapse • ZebethMedia

By zebethcontrolPosted on November 9, 2022Posted in Binance, blockchain, Crypto, EC Blockchain, EC Cryptocurrency, EC venture capital, FTX, Venture, venture capitalNo Comments

As the crypto market digests the past few days of chaos, venture capitalists see the moment as a warning, but also an opportunity for the growth of decentralization and maturation of the larger blockchain space. “As venture investors, we take a long-term view on the industry; despite the current market turmoil, we are actively assessing and investing in the right opportunities,” Marc Weinstein, founding partner of Mechanism Capital, said to ZebethMedia. “The premise of DeFi has, if anything, been strengthened by the collapse of centralized entities from opaque counterparty relationships.” Decentralized finance (DeFi) is often associated with trusting blockchain technology to execute services through smart contracts, while centralized finance (CeFi) usually refers to more traditional business models and involves having people manage funds and manually execute services. “Market sentiment is shaken, but committed VCs with experience from several crypto market cycles will continue to invest.” Marc Weinstein, founding partner of Mechanism Capital Historically, the venture market doesn’t get “too offended” by what transpires in secondary markets, David Gan, general partner at OP Crypto, said to ZebethMedia. Regardless, he said, the seeming death of FTX is saddening for everyone, “not just in the VC space, but across the board.” When there are massive crashes and burns, it speaks to what we’ve been seeing over the past decade: It’s the Wild West out there, Samantha Lewis, principal at Mercury, said to ZebethMedia. “When summarizing it all, I see it a continuation of the phase that started when winter hit and we saw Luna and all these crazy companies crash and burn like BlockFi, Celsius and now we have FTX,” Lewis said. “As an early-stage venture investor, it’s telling me the hype is now for sure gone. But that ushers in the maturation of the space that a lot of us have been craving for a really long time.”

Binance backs out of deal to buy FTX • ZebethMedia

By zebethcontrolPosted on November 9, 2022Posted in Binance, Crypto, crypto exchanges, FTXNo Comments

The world’s largest crypto exchange by volume, Binance, said it would walk away from a deal with the third largest crypto exchange by volume, FTX. On Tuesday, Binance signed a letter of intent to purchase its troubled competitor, FTX, in what appeared to be a potential bailout of the latter amid a liquidity crunch. But just a bit over 24 hours later, that plan crumbled. Binance backed out after reviewing the company’s structure and books, it said in a statement to the Wall Street Journal. “Our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help,” Binance said. “As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged U.S. agency investigations, we have decided that we will not pursue the potential acquisition of [FTX],” Binance said in a tweet. “Every time a major player in an industry fails, retail consumers will suffer,” Binance continued. “We have seen over the last several years that the crypto ecosystem is becoming more resilient and we believe in time that outliers that misuse user funds will be weeded out by the free market.” Binance and FTX did not immediately respond to ZebethMedia requests for comment. Earlier today, sources familiar with the matter told CoinDesk that FTX’s loan commitments raised concerns among Binance’s top brass. The report follows Binance CEO Changpeng Zhao tweeting that FTX “going down is not good for anyone in the industry.” This is a developing story and may be updated if new information arises.

Crypto’s biggest M&A deal, between Binance and FTX, looks unlikely to close • ZebethMedia

By zebethcontrolPosted on November 9, 2022Posted in Binance, Crypto, FTXNo Comments

Crypto exchange Binance, the largest in the world by volume, signed a letter of intent Tuesday to purchase its troubled competitor, FTX, in what appears to be a potential bailout of the latter amid a liquidity crunch. But after less than a day of due diligence, Binance appears highly unlikely to go forward with the deal, sources told Coindesk. Specifically, FTX’s loan commitments raised concerns among Binance’s top brass, Coindesk reported. The report comes shortly after Binance’s chief executive, Changpeng Zhao, tweeted that FTX “going down is not good for anyone in the industry,” and the ongoing episode has “severely shaken” the confidence of consumers. FTX, helmed by billionaire Sam Bankman-Fried, found itself in trouble this week after reports revealed that the exchange was unusually intertwined with its sister entity, Alameda Research, which held large amounts of the exchange’s native FTT token. In the 72 hours leading up to Tuesday morning’s deal announcement from Binance and FTX, the latter exchange saw some $6 billion in withdrawals from its platform stoked by investor fears over its financial health. And it is embroiled in a reported months-long probe by U.S. regulators over potentially mishandling customer funds that came to light on Wednesday. Zhao and Bankman-Fried had clashed for months on social media over regulatory issues and other points of conflict before they both announced the potential deal. Their tension came to a head earlier this week after Zhao Tweeted that Binance would be liquidating its holdings of FTT, which it acquired through its participation as an early backer of FTX, as a “post-exit risk management” measure. It appeared tensions had cooled on Tuesday as Bankman-Fried called Zhao, asking the Chinese-Canadian fellow billionaire to rescue his exchange by purchasing its non-U.S. operations. Bankman-Fried offered a “huge thanks” to Zhao and Binance in a string of Tweets following that call, noting that the deal was “a user-centric development that benefits the entire industry.” Binance wasn’t Bankman-Fried’s first call, though. A spokesperson for crypto exchange OKX told Reuters on Wednesday that Bankman-Fried had approached OKX Monday morning about a potential deal, which OKX says it declined out of concerns over industry consolidation.

Will the FTX debacle scupper crypto venture dealmaking? • ZebethMedia

By zebethcontrolPosted on November 9, 2022Posted in Binance, blockchain, Crypto, EC Blockchain, EC Cryptocurrency, EC Newsletter, EC venture capital, FTX, The Exchange, Venture, venture capitalNo Comments

The dramatic fall of FTX is taking with it more than just the paper wealth of one of crypto’s most colorful players. Given the amount of invested capital that may be incinerated in the crypto exchange’s anticipated sale to rival Binance, it’s hard not to wonder where venture goes next in web3. FTX is no longer set to generate massive investor return when it goes public; instead, backers of the exchange are concerned that their investment could go to zero in the Binance transaction. The potential sale of FTX to the larger exchange may save the brand — there’s a lot we still don’t know about its health sans rescue — but it is not clear if any of the capital pools that helped power its rise will get their money back. The Exchange explores startups, markets and money. Read it every morning on ZebethMedia+ or get The Exchange newsletter every Saturday. The scale of the potential losses is staggering. FTX’s mid-2021 funding round was something that it described at the time as the “largest raise in crypto exchange history,” for example. The $900 million round valued the company at around $18 billion. The boast about the round now sounds more like a threat, at least from a venture returns perspective. “Over 60 investors participated in the $900M Series B,” FTX wrote at the time, noting that “Paradigm, Sequoia Capital, Thoma Bravo, SoftBank, Ribbit Capital, Insight Partners, Third Point, Lightspeed Venture Partners, Altimeter, BOND, NEA, Coinbase Ventures, Willoughby Capital, 40North, Senator Investment Group, Sino Global Capital, Multicoin, the Paul Tudor Jones family, Izzy Englander, Alan Howard, VanEck, Hudson River Trading, and Circle” put capital into the round.