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Binance has a plan to save crypto, if it’s not too late

Binance has a plan to save crypto, if it’s not too late

Few were prepared The dramatic collapse of the FTX crypto exchange November 11. The incident has left hundreds of thousands of customers without access to their funds, and the ripple effects have removed billions of dollars from the market, as well as calling into question the integrity of other crypto companies.

FTX was so embedded in the cryptosphere that many companies (including crypto lenders). Genesis and BlockFi) have spent the last week hastily calculating the financial exposure of the collapse, fearing that they might be swept away in the wave. Others, however, have seen opportunity in the crisis and are preparing plans to prevent further contamination. “We really think this is a very good cleanup period,” Binance CEO Changpeng Zhao said in a Twitter Spaces Q&A earlier this week. “Weak projects are gone, and the industry is much healthier.”

Zhao, who hails from CZ, says he has a plan to navigate the FTX saga and rebuild his confidence. With one of Binance’s main competitors no longer operating, the company’s voice as the world’s largest crypto exchange has grown in influence. In a series of tweets published since November 8, CZ announced that Binance will Publish transparent “Proof of Reserves”. to demonstrate that it retains sufficient cash to fund the withdrawal, and launching a recovery fund to help promote legal projects in need.

It continued on November 15 a blog post establishing good practices for exchanges, which can be summarized as: Do not gamble, do not borrow and do not cheat. “We can’t let a few bad actors ruin the reputation of this industry,” CZ wrote.

In the past week, many other crypto exchanges have followed suit. Bitfinex, Crypto.com, Huobi, OKX and Kucoin have released or ordered proof of reserves. Some, like Kraken and Coinbase, have sought to highlight the fact that they are publishing accounts. Almost all have either supported CZ’s recovery fund or promised more investment in crypto startups.

The humor between the exchanges is subdued but optimistic. They hope that more transparency will allow them to continue to attract crypto newcomers, limiting the risk of being accused of FTX-style accounting.

“This is a huge setback for the crypto industry,” says Blair Halliday, UK managing director of Kraken, the exchange that currently processes it. 600 million dollars in intraday crypto transactions. “[But] we believe that sensible measures by the industry, such as proof of reserves audits, will be a decisive starting point to restore the loss of confidence in the ecosystem.’ Likewise, Paolo Aroino, CTO of Bitfinex (who hosts 100 million dollars in daily trades), he says that only exchanges with a track record of responsible governance will survive, but that “the cryptocurrency industry will emerge stronger” from the ordeal.

However, there are industry leaders who believe that the FTX collapse should be seen as an opportunity for a deeper overhaul, and a return to the founding principle of the cryptocurrency movement: decentralization.

“It’s a good learning moment for the industry,” says Hayden Adams, founder of UniSwap, the world’s largest decentralized exchange (DEX). “Indeed [FTX founder Sam Bankman-Fried] He had the ability to do it [what he did] He talks about building one centralized the product he had full control over.’

Unlike traditional exchanges, which allow people to exchange fiat currency and hold assets on behalf of clients, DEXs never take control of clients’ funds, and trades are conducted on a peer-to-peer basis. According to Adams, this decentralized model eliminates the middleman risk that got FTX into hot water.



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