CoinEx CEO: The world can no longer ignore cryptocurrencies

The unstable macroeconomic environment, together with the collapse of FTX and Alameda Research, has sparked a crisis in the industry.

This is not CoinEx’s first crypto-winter: since its launch in December 2017 the exchange has attracted more than 4 million users from 200 countries.

We spoke with CoinEx founder Haipo Yang about managing the business during a bear market, the prospects for Web3, and attitudes toward the Proof-of-Reserves initiative.

ForkLog: Hello, Yang! On December 24 CoinEx turned five. Since the exchange’s founding, the crypto market has hit new highs and has again entered a bear phase. How has the company navigated the various stages of this cycle?

Haipo Yang: Hello! We launched CoinEx when the crypto market was at its peak. The crypto-winter followed, but we did not back down, as we were always oriented toward a long-term perspective.

The exchange team focused on product optimization and the integration of new services such as the financial account and automated market maker (AMM). This helped CoinEx attract new users interested in the DeFi segment.

We look to the future with optimism: the crypto industry is at an early stage of development, and strong market volatility is normal.

I am confident that new solutions in the spirit of DeFi 2.0 will attract more users, and after some time the community will come back to life.

ForkLog: What significant changes have occurred over these years?

Haipo Yang: It has been five eventful years. Ethereum’s dominance declined after the spread of non-EVM networks, and the network’s throughput has increased significantly thanks to Layer 2 solutions such as Arbitrum, Optimism and zkSync.

The crypto industry has witnessed the shift from ICOs to DeFi, GameFi, Play-to-Earn and X-to-Earn. Many DeFi protocols have been well received by users.

In 2022 the world could no longer ignore cryptocurrencies: they became a popular investment option in many countries. Thus, El Salvador recognised Bitcoin as legal tender, and the SEC approved a Bitcoin futures ETF.

ForkLog: What challenges have you faced lately?

Haipo Yang: A crisis of trust. It is linked to external factors: many investors have been disappointed in the industry due to improper use of client funds by exchanges.

The current crypto winter will lay bare even more problems that the community does not notice in a bull market. Foremost among them are issues of securely storing users’ funds.

Reputation is built over years and destroyed in seconds. Knowing this, we regularly conduct comprehensive code audits and stress tests, as well as monitor the exchange’s systems around the clock.

As a result of this policy, since its launch CoinEx has not had a single security incident.

ForkLog: By ‘external factors’ do you mean the FTX collapse?

Haipo Yang: Of course, FTX and other ‘black swans’ such as the collapse of Terra and the bankruptcy of Celsius heavily hit the market.

However, my experience suggests that such crises often present good investment opportunities.

ForkLog: How have these ‘black swans’ affected the crypto industry?

Haipo Yang: I believe that the situation around FTX and Alameda Research cannot be used to judge the entire industry. The same goes for Terra. These are problems of individual companies that invested in each other and traded user assets with high leverage.

The problem is that such platforms are too centralized and opaque. Before the revelations in the media, no one suspected that FTX had illegally appropriated client funds, and that Alameda Research carried enormous debts.

FTX did not notify traders of the risks taken and the movement of funds. This is extremely disrespectful behaviour. Exchanges should provide trading services, not seek extra profit at the risk of clients’ assets.

Users’ funds at CoinEx are 100% safeguarded. And I guarantee that the exchange will not misuse those funds.

ForkLog: And what do you think about the Proof-of-Reserves initiative?

Haipo Yang: This is a good way to increase transparency of centralized platforms, which promotes the healthy development of the industry.

Transparency is one of the key advantages of cryptocurrencies. I think the market has learnt the lesson from FTX. Over time, publishing reserve data will become a standard requirement for operating a crypto business.

ForkLog: Will you disclose CoinEx’s reserves?

Haipo Yang: We have already shown that client balances are fully backed by the exchange’s reserves by means of Proof-of-Reserves — a proprietary solution based on Merkle Tree.

With it, users can check at any time whether their assets are included in the exchange’s reserves.

ForkLog: CoinEx, along with many other crypto exchanges, issues a native token. Did the FTT crash affect your CET policy?

Haipo Yang: No, because the CoinEx Token is a completely different story. It can be used outside the exchange to pay for transactions on the CoinEx Smart Chain.

In addition, we buy back and burn CET every month. This information is easy to verify in the CET section on the exchange’s website.

ForkLog: During bear markets, many users invest in tools with small but steady returns. Are there similar services on CoinEx?

Haipo Yang: Yes, that’s the automated market maker and the financial account.

The first enables earning by providing liquidity to pools, the second on deposits with compound interest. However, when using AMM you must consider the risk of impermanent loss.

We do not plan to stop there and are developing new tools for passive income. I would recommend following our updates on Telegram and Twitter!

By the way, there is already information about the promos dedicated to CoinEx’s fifth anniversary. In the first, we will give $100 to twenty participants, and in the second — distribute 300 000 CET among 100 exchange users.

ForkLog: What do you think about Web3? Do you plan to add support for such applications?

Haipo Yang: The CoinEx ecosystem already includes several infrastructure Web3 services: ViaWallet wallet, ViaWallet Explorer explorer and the CoinEx Smart Chain platform (CSC).

For now we are limited to them. Web3 still has a long way to mass adoption.

ForkLog: Have sanctions against Russia and Belarus affected CoinEx’s policy?

Haipo Yang: No. While we comply with local regulators’ requirements, at heart CoinEx is an international platform that serves clients around the world.

We believe blockchain and cryptocurrencies should be accessible to anyone, regardless of country of residence.

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