- Binance CEO shared six practices existing firms must incorporate to stay healthy.
- Zhao said exchanges must be risk-averse and avoid trading with customers’ funds.
- The CEO encouraged asset managers to maintain strong reverses to cover unforeseen circumstances.
Following the collapse of the former second-largest crypto exchange FTX, the CEO of Binance, Changpeng Zhao (CZ), has published six principles he believes existing businesses must incorporate to maintain health status.
Zhao said centralized crypto marketplaces must be risk-averse and ensure they do not trade or invest with customers’ funds. In addition, they must proactively issue risk warning signals to users to remind them of the volatility across the crypto market.
Secondly, Binance CEO suggested that exchanges should sidestep using tokens they created as collateral in place of other assets. Interestingly, FTX went bankrupt after it became clear that its reserve primarily consisted of its native token FTT.
Thirdly, CEO Zhao urged crypto asset managers to share live proof of assets to foster trust in the ecosystem. Leading by example, the Binance exchange published the balances of its cold wallet addresses last Thursday. The business controls 475k units of Bitcoin, 4.8 million Ethereum tokens, 21.7 billion BUSD, and other over 590 coins.
#Binance published cold wallet addresses and balances for 6 of our 600 coins. More to come. 475K BTC4.8M ETH17.6B USDT21.7B BUSD601M USDC58M BNBThese were public before anyway, but organized together for your ease of viewing.https://t.co/Jm6dVoDqM5— CZ Binance (@cz_binance) November 10, 2022
Furthermore, CZ encouraged crypto exchanges to maintain strong reverses to cover unforeseen circumstances of extreme exploits. He believes they must also avoid taking on debt or engaging in excessive leverage. Notably, Binance has about one billion dollars in its SAFU Fund.
On the aspect of security, the crypto industry should form a coalition to agree on standards for the quality of security measures for exchanges and projects, according to the CEO. He concluded that asset managers must partner with law enforcement agencies to support the recovery and investigations of stolen funds.
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