Changpeng Zhao, popularly known as CZ, the CEO of Binance, remains resolute in the face of recent regulatory and media attention directed at his company. He views these challenges as an opportunity for Binance to demonstrate its commitment to compliance and dispel what he calls “FUD” (Fear, Uncertainty, Doubt).
During a Twitter Spaces event on Friday, CZ accused Binance’s critics of attempting to liken his company to FTX, the now-defunct cryptocurrency exchange once operated by his former rival, Sam Bankman-Fried. This comparison arises amidst ongoing legal issues faced by FTX. Despite the prevailing FUD, CZ contends that Binance has shown its resilience by maintaining its substantial user base and market share.
“We are a much stronger company today than we were two years ago, I think,” CZ stated confidently, emphasizing that Binance is “way ahead of the game in terms of regulatory compliance.”
CZ’s stance contradicts the allegations made against him, Binance, and its U.S. subsidiary, Binance US, by the U.S. Securities and Exchange Commission (SEC), which filed a lawsuit against the company on June 5. The SEC’s complaint asserts that millions of company funds were transferred between entities owned by CZ as part of what the agency characterizes as a wash trading scheme. Additionally, the SEC accused Binance of operating as an unlicensed securities exchange and conducting illegal operations in the United States.
The SEC’s lawsuit is not the sole regulatory challenge facing Binance. On March 27, the U.S. Commodities and Futures Trading Commission also sued Binance, alleging violations of U.S. trading and derivatives regulations. The company is facing legal scrutiny in other countries, including Canada, Australia, and France, over suspected regulatory breaches.
Although CZ correctly points out that Binance remains the world’s largest cryptocurrency exchange, the lawsuits have taken their toll. Following the SEC’s lawsuit, Binance US witnessed a 78% reduction in its market share in the week that followed, while overall trading volumes on Binance decreased by 52%, according to Coingecko.
Nevertheless, CZ maintains an optimistic perspective regarding the broader regulatory landscape for cryptocurrencies globally, which he believes could alleviate some of the bearish pressures affecting the market.
He highlighted “positive” regulatory developments in several countries, including France, Hong Kong, and Japan. Referring to the United States, CZ mentioned recent court decisions that favored Ripple Labs and asset manager Grayscale as encouraging signs for the industry.
“I think right now, it does feel like there is a lack of clarity in crypto regulations, and they’re just doing enforcements, which is a bit sad,” CZ acknowledged, referring to the lawsuits against Binance among these enforcement actions. “Hopefully, with communication and collaboration, things can move forward better.”
