Changpeng “CZ” Zhao, CEO of cryptocurrency exchange Binance, has warned users that his intention to acquire FTX may draw scrutiny from global regulators, but the company is prepared.
In a letter to Binance staff tweeted on Nov. 9, CZ said that although the deal to acquire another major cryptocurrency exchange was still in the works, regulators would likely “further scrutinize exchanges” and would make it difficult to acquire operating licences. He added that if the deal resulted in FTX’s demise, it would be a loss for the crypto industry and not a “win” for Binance.
“People now think we are the biggest and will attack us more,” said the CEO of Binance. “We are used to being open and supporting each other through tough times. In fact, we welcome scrutiny. We need to significantly increase our transparency, proof of reserves, insurance funds, etc. There is much more to come in this area.”
In the spirit of transparency, might as well share the actual note, sent to all Binance team globally a few hours ago.https://t.co/IUNkPcLC8T pic.twitter.com/XGlIJB7EV5
— CZ Binance (@cz_binance) November 9, 2022
CZ announced on Nov. 8 that FTX contacted Binance for help in response to a “major liquidity crisis,” resulting in the exchange signing a non-binding letter of intent to purchase FTX. Binance’s CEO said at the time that the company was “assessing the situation on the fly” and had the ability to “exit the deal at any time.”
FTX’s native token, FTT, has seen significant price volatility following news of the potential deal, falling from over $19 on Nov. 8 to $4.71 at the time of publishing this story. In his letter, CZ warned the Binance team not to buy or sell FTT, just as the exchange would maintain its current holding of FTT tokens.
“We have to hold ourselves to a higher standard than even the banks,” CZ said. “As I’ve said many times over the years, let’s ignore the prices. Let’s keep our heads down and focus on creating products that people use.”
Despite CZ’s willingness to accept scrutiny from regulators, it is unclear whether authorities intend to act to prevent the deal from going ahead, as it would likely give Binance an overwhelming majority of the global cryptocurrency market. In a statement to Cointelegraph, a spokesperson for the United States Commodity Futures Trading Commission said that the regulator was looking into the situation.
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