KryptoCurrency

November 23, 2024
Crypto

In staff letter, Binance CEO embraces scrutiny from regulators amid potential FTX deal

By akohad Nov9,2022

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Changpeng Zhao, the chief executive officer of crypto exchange Binance also known as “CZ,” warned users its intention to acquire FTX may invite scrutiny from global regulators — but the firm is ready.

In a letter to Binance staff tweeted on Nov. 9, CZ said though the deal to acquire another major crypto exchange was still in the works, regulators would likely “scrutinize exchanges even more” and make it difficult to acquire operating licenses. He added that if the deal resulted in FTX going down, it would be a loss for the crypto industry and not a “win” for Binance.

“People now think we are the biggest and will attack us more,” said the Binance CEO. “We are used to being open and leaning into headwinds. In fact, we embrace scrutiny. We must significantly increase our transparency, proof-of-reserves, insurance funds, etc. A lot more to come in this area.”

CZ announced on Nov. 8 that FTX approached Binance for help in response to a “significant liquidity crunch,” resulting in the exchange signing a non-binding letter of intent to purchase FTX. The Binance CEO said at the time that the company was “assessing the situation in real time” and had the ability “to pull out from the deal at any time.”

FTX’s native token FTT has experienced significant price volatility following news of the potential deal, dropping from more than $19 on Nov. 8 to $4.71 at the time of publication. In his letter, CZ warned the Binance team not to buy and sell FTT, just as the exchange would keep its bag of tokens.

“We need to hold ourselves to a higher standard than even in banks,” said CZ. “As I have said many times over the years, ignore the prices. Let’s keep our heads down and focus on building products people use.”

Related: Binance CEO shares ‘two big lessons’ after FTX’s liquidity crunch

Despite CZ’s willingness to embrace scrutiny from regulators, it’s unclear if authorities intend to act to stop the deal from going through, as it would likely give Binance an overwhelming majority of the global crypto market. In a statement to Cointelegraph, a U.S. Commodity Futures Trading Commission spokesperson said the regulatory body was monitoring the situation.