Binance CEO Changpeng Zhao, better known by his initials CZ, is not intimidated by the recent storm of regulatory and media scrutiny aimed at his company. Instead, he sees an opportunity for Binance to prove its merits as it faces what he says is FUD.
In a Twitter Spaces event on Friday, CZ accused Binance’s critics of attempting to paint his company as akin to FTX, the failed cryptocurrency exchange operated by CZ’s former rival Sam Bankman-Fried, amid its ongoing legal troubles. Despite the widespread fear, uncertainty and doubt (FUD), CZ says that Binance has only proved its strength by maintaining its large user base and market share.
"We are a much stronger company today than we were two years ago, I think," said CZ, adding that Binance is "way ahead of the game in terms of regulatory compliance."
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CZ’s defense runs counter to the accusations levied against him, Binance, and its U.S. subsidiary Binance US by the Securities and Exchange Commission, which launched a lawsuit against it on June 5. In the complaint, the SEC alleges that millions in company funds was moved between companies owned by CZ in what the agency says was a wash trading scheme. The SEC also accused Binance of operating as an unlicensed securities exchange, and illegally operating in the U.S.
The SEC’s lawsuit is not the only regulator taking aim at Binance. On March 27, the U.S. Commodities and Futures Trading Commission sued Binance for what it alleges are violations of U.S. trading and derivatives rules. The company also faces legal scrutiny in Canada, Australia and France on suspected regulatory violations.
Although CZ is right in asserting that Binance remains the world’s largest exchange, the lawsuits have taken their toll. In the week after the SEC’s lawsuit, Binance US saw its market share evaporate by 78%, and overall trading volumes on Binance itself fell by 52%, according to Coingecko.
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The leading cryptocurrency exchange by trading volume, Binance, and its CEO Changpeng Zhao were sued Monday by the Commodity Futures Trading Commission (CFTC). The U.S. regulator alleged that Zhao and his company violated trading and derivatives rules, according to a lawsuit filed by the CFTC in a Chicago federal court. The two largest cryptocurrencies by market capitalization, Bitcoin and Ethereum, fell on the news, according to CoinGecko. Over the past hour, Bitcoin had fallen 3.3% to $26,800,...
Despite this, CZ struck a confident tone in laying out how he still sees improvements in the broader regulatory landscape for cryptocurrency globally, which he suggests could ease up on some of the bearish pressures weighing on the market.
He noted that there were "positive" regulatory developments in a number of countries worldwide, pointing to France, Hong Kong, and Japan, among others. Turning to the U.S., CZ alluded to recent court decisions favorable to Ripple Labs and asset manager Grayscale as other positive changes for the industry.
CZ said it was his view that involving the courts in deciding regulatory questions was "a bit unnecessary," but added more communication with U.S. officials would lead to changes in how regulators deal with cryptocurrency.
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"I think right now, it does feel like there is a lack of clarity in the crypto regulations, and they're just doing enforcements, which is a bit sad," said CZ, acknowledging the lawsuits against Binance among those enforcement actions. "Hopefully, with communication and collaboration, things can move forward better."
