Binance CEO Changpeng Zhao(CZ) shared his views regarding the recent FTX debacle with the Binance community, stating FTX going down is not good for the industry as it will welcome tougher regulations around the globe.
“Do not view it as a “win for us. User confidence is severely shaken. Regulators will scrutinize exchanges even more. Licenses around the globe will be harder to get,” CZ said in the statement.
In response to harder regulations, the CEO said that Binance would “significantly” increase transparency, proof of reserves, insurance funds, and more.
The statement from CZ came after Binance announced acquiring FTX, which led to huge speculation that drove BNB prices but later brought down the whole market amid overall bearish sentiments. Earlier, Binance decided to sell all its FTT reserves which led to a huge withdrawal of assets from the Bahamas-based cryptocurrency exchange.
But, the Binance CEO confirmed that the announcement of the acquisition of FTX that followed was not pre-planned and revealed that he was unaware of the internal state of FTX.
“It was less than 24 hrs ago that SBF called me. And before that, I had very little knowledge of the internal state of things at FTX. I could do some mental calculations with our revenues to guess theirs, but it would never be very accurate,” Zhao said.
Meanwhile, the CEO hinted that he could still walk away from the acquisition deal. However, while the due diligence on the deal is still ongoing, Zhao revealed that he had ordered his exchange, Binance, to stop the sale of FTT and warned others not to buy and sell FTT tokens.
Earlier, Zhao warned actors against borrowing to run a crypto business. CEO believes FTX’s troubles offer lessons to other actors in the industry.
Two big lessons:
1: Never use a token you created as collateral.
2: Don’t borrow if you run a crypto business. Don’t use capital “efficiently”. Have a large reserve.
Binance has never used BNB for collateral, and we have never taken on debt.
— CZ ? Binance (@cz_binance) November 8, 2022
Further, in a separate Twitter post, he called on all crypto exchanges to carry out proof-of-reserves to enhance the transparency of user funds.