Changpeng Zhao (45), the next high-profile traveller in the crypto industry, is inadvertently gaining attention. The Chinese-Canadian businessman is the founder of Binance, the world’s largest crypto exchange. There is also great uncertainty among its investors after the bankruptcy of rival FTX. Within a month, they pulled billions of deposits from Binance.
The pressure on Zhao is enormous. Unlike banks, the crypto industry is virtually unregulated and this is now ruining it. Zhao tries everything to reassure investors and convince them of Binance’s stability.
Binance is very big, very unsuccessful
Binance is by far the largest crypto exchange in the world. If he gets in trouble, the explosive power will be great enough to throw the entire industry into the abyss. As the fourth largest player, the bankruptcy of FTX caused cryptocurrency prices to plummet. Zhao wanted to prevent this and save FTX. But after glancing at the books, he rowed back at the last second.
FTX was a black box where billions of customer funds disappeared without a trace. This fear now affects platforms like Binance. Like many other industry representatives, Zhao therefore reported his reserves as “proof of reserves.” These should reach 60 billion dollars.
More than 1 billion people were evacuated again on Tuesday
But he could not completely calm the financial world. Problem: Binance’s obligations do not appear in it. Zhao’s temporary suspension of payment of the cryptocurrency USDC has also sparked speculation about a lack of reserves. Investors were reminded of the ugly FTX case. FTX boss Sam Bankman-Fried (30) also long argued that there was no problem with his exchange, but then suddenly stopped paying.
Another $1.14 billion was withdrawn from the platform on Tuesday. But this is significantly less than in the days when FTX or the cryptocurrency system Terra Luna went bankrupt. “Things seem to have stabilized,” Zhao wrote on Twitter.
In the last 24 hours, more new client funds have flowed than have flowed in. Binance seems to have regained its trust. Binance supporters believe this is where a planned but unsuccessful attack on the platform took place.
Binance faces money laundering charges
However, the crisis is not over. Because Binance is barely threatened in the US. The U.S. Attorney General is considering filing a lawsuit against the crypto exchange, Reuters news agency reported. Regarding possible money laundering. One of the crimes Sam Bankman-Fried was charged with in the FTX case.
This new development puts pressure on Zhao’s own cryptocurrency, Binance Coin. While other cryptocurrencies like Bitcoin have gained in value recently, Binance Coin continued to lose value on Wednesday and is currently just under $270. In November 2021 it was still $650. The pressure on Binance is still high.