Binance CEO Changpeng Zhao published a memo to staff at the bitcoin exchange, in which he commented on the FTX crisis and urged restraint in trading the rival’s FTT utility tokens.
In the spirit of transparency, might as well share the actual note, sent to all Binance team globally a few hours ago.https://t.co/IUNkPcLC8T pic.twitter.com/XGlIJB7EV5
— CZ 🔶 Binance (@cz_binance) November 9, 2022
According to him, Binance had not planned anything of the sort. FTX chief Sam Bankman-Fried rang Zhao about a day ago. Prior to that, the Binance CEO allegedly had only a dim understanding of the rival’s position.
“I want to remind everyone: do not trade FTT tokens. […] As soon as I finished my conversation with Sam Bankman-Fried yesterday, I asked our team to stop selling as an organisation,” Zhao wrote.
He also declined to comment on the deal publicly or internally, and spoke of “a strong team that will handle this”.
“The collapse of FTX is bad for everyone in the industry. Do not view this as “a win for us”. User trust has been seriously undermined. Regulators will scrutinise exchanges even more closely. Obtaining licences worldwide will be harder,” he added.
At the same time Zhao backed thorough checks and noted the need to raise transparency and reliability of reserves and insurance funds.
Earlier the CEO of Binance promised to confirm the exchange’s reserves of Bitcoin. In the meantime, the company expanded its Safe Asset Fund for users. It now holds around $1 billion.
“Ignore prices. Let’s focus on building products that people actually use. This has always worked, and today is no exception,” Zhao wrote.
According to a CoinDesk source, Binance is leaning away from a takeover of FTX after an initial review of the books.
Bitcoin’s price reacted to the news by dropping below $17,000.
On November 6, Zhao announced the intention to divest from FTT. Assets, together with BUSD, totaling about $2.1 billion, were the result of the company’s exit from its portfolio investment in FTX.
Against a backdrop of reports of a spat between the two platforms, and concerns about the financial health of FTX, the FTT token fell about 30%.
On November 8, Bankman-Fried and Zhao announced a strategic partnership. It is designed to resolve the liquidity crisis and contemplates a possible takeover of FTX by the Binance exchange.
Lucas Nuzzi, head of R&D at Coin Metrics, described as a possible cause of the FTX crisis the provision of “large financial assistance” by Alameda Research, affiliated with Bankman-Fried, to a Bitcoin exchange in the second quarter.
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