Binance CEO Changpeng Zhao Said His company pulled the FTX deal because it didn’t make sense and had huge financial holes they had to cover.
Speaking at the Indonesia Fintech Summit on November 11, CZ said that Binance already covers most of the markets operated by FTX.com.
CZ said the FTX implosion set the industry back several years considering the scale of the exchange to the industry.
The Binance CEO also cited the regulatory scrutiny FTX has drawn as one of the reasons for pulling the deal.
Reports have revealed that a US agency was investigating FTX’s handling of customer funds and lending activities.
Meanwhile, Sam Bankman-Fried did a little digging on Binance in a leaked Slack message, stating that the CZ-led exchange has no plans to complete the trade.
A CryptoSlate investigation reveals that FTX and Alameda Research siphoned each other with Binance as an unsuspecting middleman.
CZ Predicts More Regulations For Crypto Exchanges
Zhao predicted that regulators will step up their scrutiny of cryptocurrency exchanges in the wake of FTX.
According to CZ, regulators need to shift their focus not only on Know Your Customer (KYC) and Anti-Money Laundering (AML) laws, but also on how exchanges operate. He said:
“[Regulators]need to focus more on exchange operations … business models, proof of reserves.”
CZ added that his company is also considering educating regulators on how to audit crypto exchanges.
“We also want to educate regulators around the world. How do we audit cryptocurrency exchanges, not just KYC and AML, but how do we check cold wallets?” How do you use balance adjustments? How do you check transaction logs? How do you use on-chain monitoring tools to do this?”
Cryptocurrency exchanges such as Binance, Crypto.com, KuCoin, and Huobi have been forced to disclose their reserves in order to regain the trust of retail users.