Changpeng Zhao (pictured), the founder and chief executive of Binance, said it was not “100%” the responsibility of watchdogs to protect consumers and the crypto sector had to play its own part. However, he said preventing a rogue figure from evading regulators was difficult.
“No one can protect [from] a bad player, to be very frank, if a guy is very good at lying, and very good at just pretending to be what he’s not. [If] somebody wants to violate the law, the law is not going to prevent that. The law can help to reduce that,” Zhao said, speaking on Monday at the B20 business summit in Bali.
Zhao did not refer to the founder of FTX, Sam Bankman-Fried, in his comments but was responding to a question about regulation after the FTX collapse.
The FTX group, a top five cryptocurrency exchange before its implosion, filed for bankruptcy protection in the US on Friday. The Financial Times reported at the weekend that FTX had $9bn (£7.65bn) of liabilities and $900m in liquid assets – those it could easily sell – when it collapsed.
Zhao also announced on Monday plans for an “industry recovery fund” to help crypto firms that are illiquid, or struggling to sell assets in a volatile market.
“To reduce further cascading negative effects of FTX, Binance is forming an industry recovery fund, to help projects who are otherwise strong, but in a liquidity crisis,” he wrote.
”To reduce further cascading negative effects of FTX, Binance is forming an industry recovery fund, to help projects who are otherwise strong, but in a liquidity crisis. More details to come soon. In the meantime, please contact Binance Labs if you think you qualify.”
Before its collapse, FTX had performed a lender-of-last-resort role for crypto firms that were struggling after a marked decline in the digital asset market since November last year – a period over which the collective value of crypto assets fell from $3tn to less than $1tn.
Hours before FTX collapsed last Friday, BlockFi, a crypto lender, said it was pausing customer withdrawals due to the FTX situation. FTX had bailed out BlockFi in June with a $250m loan, a week after Bankman-Fried’s company had loaned almost $500m to the struggling crypto broker Voyager Digital.
Speaking in Bali, Zhao repeated calls for crypto regulation. Bankman-Fried had been lobbying on the issue in Washington before FTX’s collapse, in a source of apparent tension with Zhao.
“We’re in a new industry, we’ve seen in the past week, things go crazy in the industry,” Zhao said. “We do need some regulations, we do need to do this properly, we do need to do this in a stable way.”
