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Binance CEO expects more regulatory scrutiny following FTX implosion

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Binance CEO expects more regulatory scrutiny following FTX implosion

Binance CEO expects more regulatory scrutiny following FTX implosion Oluwapelumi Adejumo · 7 seconds ago · 2 min read

CZ stated that the FTX implosion has set the industry back a few years considering the size of the exchange to the industry.

2 min read

Updated: November 11, 2022 at 5:34 pm

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Cover art/illustration via CryptoSlate

Binance CEO Changpeng Zhao said his firm backed out of the FTX deal because it did not make sense and the huge financial hole they would have had to cover.

Speaking at the Indonesia Fintech Summit on Nov. 11, CZ  said Binance already covers most of the markets that FTX.com operates in. Apart from that, his exchange has more customers than its embattled rival.

CZ stated that the FTX implosion has set the industry back a few years considering the size of the exchange to the industry.

The Binance CEO also referenced the regulatory scrutiny FTX has drawn as one of the reasons it dropped the deal.

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Reports have revealed that US agencies were investigating FTX’s handling of customer funds and lending activities.

Meanwhile, Sam Bankman-Fried took a slight dig at Binance in a leaked slack message, saying the CZ-led exchange did not plan to complete the deal.

CryptoSlate research revealed that FTX and Alameda Research had used Binance as an unsuspecting intermediary in siphoning funds from each other.

CZ predicts more regulations for crypto exchanges

Zhao predicted that regulators would expand their scrutinies into crypto exchanges following FTX’s fallout.

According to CZ, regulators should shift their focus away from just know-your-customer (KYC) and anti-money laundering (AML) laws, but also to how the exchange operates. He said:

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“(Regulators have) to focus more on the exchange operations …business models, proof-of-reserves”

CZ added that his firm would also look to educate regulators on how to audit crypto exchanges.

“We also want to educate regulators all around the world -how do you do audits on crypto exchanges, not just KYC or AML, which is important, but how do you check cold wallets? How do you use balance reconciliations? How do you check transaction logs? How do you use on-chain monitoring tools to do this?”

Crypto exchanges like Binance, Crypto.com, KuCoin, Huobi, etc., have been forced to reveal their proof-of-reserves in a bid to regain retail users’ trust.

Binance

Third party auditor confirms Binance Bitcoin reserve is over collateralized

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Third party auditor confirms Binance Bitcoin reserve is over collateralized

Third party auditor confirms Binance Bitcoin reserve is over collateralized Oluwapelumi Adejumo · 2 hours ago · 1 min read

The financial auditor Mazars focused on Binance users’ Bitcoin holdings across several blockchains

1 min read

Updated: December 7, 2022 at 3:05 pm

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Cover art/illustration via CryptoSlate

Binance’s Bitcoin (BTC) reserves collateralization is in excess of 100% as of Nov. 22, when a snapshot of its total liabilities and reserves was taken, according to financial auditor Mazars.

As part of #Binance’s user fund transparency work and Proof of Reserves updates, we’re working with digital assets experts at global financial audit, tax and advisory firm, @Mazars_SA.

The first report from Mazars about Binance’s $BTC Proof of Reserves has been published today.

— Binance (@binance) December 7, 2022

To arrive at this result, the auditor considered in-scope assets lent through margin and loan service offerings that are collateralized by out-of-scope assets.

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The firm focused on Binance’s users’ Bitcoin holdings across several blockchains like the Bitcoin network, Ethereum (ETH), and Binance-backed blockchain networks (BNB Chain and Binance Smart Chain).

Mazars wrote:

“At the time of assessment, Mazars observed Binance controlled in-scope assets in excess of 100% of their total platform liabilities.”

Its users can also independently confirm that their assets were included in the audit by pasting their Merkle hash into the appropriate box on the page.

The crypto exchange revealed that the proof-of-reserves for other tokens would be released soon.

Previously, Binance revealed that its customer net balance was 575,742.4228 BTC as of Nov. 11, while its on-chain reserves were 582,485.9302 BTC.

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Binance CEO Changpeng Zhao tweeted on Nov. 28 that the exchange had moved over $2 billion worth of BTC as part of its reserve audit efforts.

This is part of the Proof-of-Reserve Audit. The auditor require us to send a specific amount to ourselves to show we control the wallet. And the rest goes to a Change Address, which is a new address. In this case, the Input tx is big, and so is the Change. Ignore FUD! https://t.co/36wUPphIZk pic.twitter.com/2NkH5L5J9j

— CZ 🔶 Binance (@cz_binance) November 28, 2022

Its previous proof of reserves was criticized by Kraken’s Jesse Powell for not including liabilities.

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Australia

This Crypto Exchange Terminates Half Of Its Employees Amid Bear Market

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This Crypto Exchange Terminates Half Of Its Employees Amid Bear Market

The crypto world has had its fair share of drama as the bear market bites down on the entire landscape. In addition, global inflation has also caused most companies to resize their organizational structure.

Crypto businesses are now planning for effective cost-management strategies to prevent a collapse. However, the fear in the market for most crypto users is high since trusted firms have collapsed.

In light of recent events, Australian cryptocurrency exchange Swyftx has shown 90 of its employees the exit door. It represents a layoff of around 40% of the entire workforce – a significant number.

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Swyftx CEO Alex Harper said the company is well-positioned to handle the blowout of the FTX storm on the crypto world.

He believes the crypto market will continue to decline in 2023. This is the reason behind the massive decrease in the workforce.

Layoffs Are Common In Crypto Exchanges

Top cryptocurrency exchanges are sizing down their teams to cut costs and prevent wearing out. Other factors have prolonged the current bear market, and this seems to be the only route to stay afloat.

Coinbase – US-based crypto giant laid off around 18% of its staff. Huobi followed suit – downsizing its staff by 30%. Popular exchange Gemini laid off 10% of its workforce in June, then recruited over 60 new people in July.

Other exchanges that include CryptCorn, BitMEX, and Bybit – reduced their numerical strength. Binance, on the other hand, was one of the few exchanges that expanded operations during the current bearish phase.

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Who’s Next?

Alex Harper, the Swyftx CEO, broke the news of the layoffs in a letter addressed to employees. He referred to the staff as “90 talented friends and employees”.

He also distanced Swyftx from any association with the bankrupt exchange FTX. However, he also noted that Swyftx is not immune to the effects of such an event on the crypto market.

Harper believes that sizing down a percentage of the workforce will help the organization survive the chilly crypto winter that has claimed many victims.

According to Harper, Swyftx is one of the top crypto trading organizations; in Australia. He also stated that they are well-positioned to weather the ongoing storm in the crypto market.

Crypto market trades sideways on the chart | Source: Crypto Total Market Cap on TradingView.com

All affected employees were promised severance pay within seven days to cushion the effects. Also, they will have access to an employee stock ownership plan (ESOP) for the tenure with additional six months.

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The exchange will also provide them with job search support and employee assistance program (EAP) services. Unfortunately, the FTX crash continues with its devasting fallout, with some crypto exchanges filing for bankruptcy.

Featured Image From Pixabay, Charts From Tradingview.com

Sarah

Sarah is a journalist who continues to share her passion for writing through her writing in DeFi, FinTech, and Cybersecurity.

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aBNB

BNB Chain-Based Defi Protocol Ankr Suffers Major Exploit

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BNB Chain-Based Defi Protocol Ankr Suffers Major Exploit

Decentralized Web3 infrastructure provider Ankr has become the latest victim of a hacking attack targeting the defi space. The perpetrators who hit the platform were able to mint and steal a massive amount of tokens in a multimillion-dollar exploit.

Defi Protocol Ankr Hit by Unlimited Mint Bug Exploit Worth Millions

Ankr, a decentralized finance (defi) protocol based on Binance’s BNB Chain, has been exploited by a hacker who apparently used an unlimited minting bug. On-chain analysts broke the news on social media and the attack, which occurred on Dec. 1, was confirmed by Ankr.

On Friday, the Web3 infrastructure provider admitted on Twitter that its aBNB token had been exploited and announced it’s working with exchanges to suspend trading. In a follow-up tweet, it also insisted that all underlying assets on Ankr Staking are safe and infrastructure services unaffected.

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Our aBNB token has been exploited, and we are currently working with exchanges to immediately halt trading.

— Ankr (@ankr) December 2, 2022

Initial reports by blockchain security company Peckshield revealed the unknown attacker had been able to mint and dispose of approximately 10 trillion aBNB. It also found that some of the stolen funds had been transferred to the Tornado Cash mixer. A portion was bridged through Celer and Debridgegate to ethereum.

On-chain analysis firm Lookonchain said the exploiter minted 20 trillion tokens and dumped them on Pancakeswap, obtaining at least $5 million in the stablecoin USDC. The price of the Ankr reward-bearing staked BNB (aBNBc) has since collapsed from over $300 to a little over $1.50, at the time of writing.

Peckshield explained that a smart contract for the aBNBc token had an unlimited mint bug which the hacker took advantage of. Another report suggested the attacker had managed to gain access to the Ankr deployer key.

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Binance Freezes $3 Million Worth Of Moved Funds

BNB Chain confirmed it was aware of the attack and has blacklisted the exploiter. Binance founder and CEO Changpeng Zhao tweeted that a developer private key was hacked and the hacker used it to update the smart contract. The exchange has frozen about $3 million of funds moved to its platform.

Possible hacks on Ankr and Hay. Initial analysis is developer private key was hacked, and the hacker updated the smart contract to a more malicious one. Binance paused withdrawals a few hrs ago. Also froze about $3m that hackers move to our CEX.

— CZ 🔶 Binance (@cz_binance) December 2, 2022

Meanwhile, the BNB Chain-based destablecoin hay, that CZ referred to in his tweet, has lost its $1 peg, also as a result of an apparent exploit which was confirmed by the team of Helio Protocol. The token is currently trading at a little over $0.65.

The attacks come in a year of numerous security exploits targeting defi and crypto platforms. According to blockchain forensics firm Chainalysis, the resulting losses in 2022 amount to $3 billion. In early October, BNB Chain was temporarily paused following a hack that cost close to $600 million.

Tags in this story

aBNB, aBNBc, Ankr, Attack, Binance, bnb, BNB Chain, bug, Crypto, crypto exchange, Cryptocurrencies, Cryptocurrency, CZ, decentralized finance, DeFi, Defi protocol, Exchange, Exploit, Hacker, Hackers, hacking attack, hay, Helio, minting, Token, Tokens

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What are your thoughts on the latest exploit in the defi space? Share them in the comments section below.

Lubomir Tassev

Lubomir Tassev is a journalist from tech-savvy Eastern Europe who likes Hitchens’s quote: “Being a writer is what I am, rather than what I do.” Besides crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.

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Image Credits: Shutterstock, Pixabay, Wiki Commons

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