Binance CEO CZ on FTX, building trust in crypto and revenue opportunities in a truly DeFI world | Summary and Q&A

TL;DR

Binance CEO provides insights on recent events in the crypto industry, including the suspension of deposits on Solana and FTX's collapse, highlighting the impact on the industry, the need for increased transparency, and the potential for positive long-term effects.

Key Insights

• ❓ Binance suspended deposits of USCC and USDT on Solana due to potential issues with the Solana network.
• 🥺 Recent events, such as FTX's collapse, have negatively affected the crypto industry, leading to financial losses for consumers and increased regulatory scrutiny.
• 🍉 Despite the short-term negative impact, the CEO believes that increased transparency and education in the industry will have long-term positive effects.
• 👨‍💼 Binance's business relies heavily on trading volumes for revenue, with over 90% coming from trading activities.
• 🥺 The CEO did not anticipate the substantial impact of their words on the market, but believes that they were just the "last straw" in a series of events leading to FTX's collapse.
• 👨‍💼 Binance is considering diversifying its revenue streams, but currently does not see the need to do so as they still run a profitable business.
• 🛟 Trust and transparency are essential for companies to regain trust in the crypto industry, with measures such as proof of reserves and secure wallet infrastructure.
• 📬 Binance is open to raising external investor money if it aligns with their strategic plans, but currently has a healthy cash reserve.

Transcript

thank you Hi how are you it's great to have you I can't hear you I think hello can you hear me yes we're good now um yes well Susie you have certainly made a lot of headlines this week and just in general and as soon as this morning I saw that binance had suspended deposits of uscc and usdt on Solana so I just wanted to start there asking you about... Read More

Questions & Answers

Q: Why did Binance suspend deposits on USCC and USDT on Solana?

The CEO is not aware of the details as the decision was made by the team, but it is assumed that there were issues with the Solana network.

Q: How do these recent events, including FTX's collapse, affect Binance's business?

The CEO acknowledges the negative impact on their business and the industry, citing financial losses for consumers, decreased trust and credibility, and increased regulatory scrutiny. However, the CEO believes that these events will lead to positive changes, such as increased transparency and education.

Q: How dependent is Binance's business on trading volumes for revenue?

Trading volumes account for over 90% of Binance's revenue, which fluctuates with the price of Bitcoin. Despite this dependence, the CEO states that Binance is currently running a profitable business.

Q: Did the CEO anticipate the large impact their words would have on the market?

The CEO did not anticipate the significant impact of their tweets, stating that they were not aware of their own influence and that the industry had been losing trust in FTX for some time.

Summary

In this video, Susie, the CEO of Binance, is interviewed and asked about recent headlines regarding the suspension of deposits on Solana. She discusses the impact of the FTX collapse on the industry and the measures Binance is taking to prevent similar issues. She also talks about the dependence of Binance's business on trading volumes and the potential for diversification. Susie addresses the criticism and skepticism surrounding Binance's transparency and trustworthiness. She talks about the vulnerabilities in the industry and the need for stronger regulations. Susie also touches on Binance's plans for expansion and the criteria for listing tokens on the platform. She concludes by discussing the ideal regulatory framework for crypto companies, including classification of crypto assets, transparency, and collaboration with banks.

Questions & Answers

Q: Why did Binance suspend deposits of USCC and USDT on Solana?

Actually, I'm not sure of the details, but our team made the decision. I assume there were some issues with the Solana Network. I was at a conference in Abu Dhabi when it happened, so I need to ask for more information.

Q: How do you think the FTX collapse will hurt your business?

The collapse of FTX will impact our business and the industry in multiple ways. Many consumers will be financially affected, as their money will be stuck on FTX. This will shake confidence and trust in the industry. People will start withdrawing funds from centralized exchanges, leading to a decrease in trading volume. Regulators around the world will scrutinize us more heavily, and obtaining new licenses will become harder. We need to increase transparency and credibility in our business, which is a positive step.

Q: How dependent is your business on trading volumes for revenue?

Trading volumes account for around 90% of our revenue. As a larger player in the industry, we closely follow the Bitcoin price, which acts as an industry index. However, even with fluctuations in trading volumes, we still run a profitable business and are financially stable.

Q: Did you anticipate the impact your tweets would have on the market?

No, I did not anticipate the magnitude of the impact. We simply announced that we had some FTT tokens and planned to sell them gradually over time. I do not believe I have that much influence, and there were other factors that led to FTX's collapse. People had been losing trust in FTX, and there were suspicions about their activities. While our tweets may have contributed, it wasn't the sole trigger.

Q: Are you considering diversifying Binance's revenue streams?

We have the ability to diversify our revenues, but currently, we focus on providing a seamless experience for users and lowering barriers for crypto adoption. We have various products that can generate revenue, such as CoinMarketCap, where we removed ads to improve the user experience. We could also introduce transaction fees for our wallet and monetize other products if needed. However, at the moment, we don't see a need to diversify in the short term.

Q: What more needs to be done for companies to regain trust in crypto?

Publishing proof of reserves is just one aspect of building trust. We need to focus on secure wallet structures, infrastructure, custody solutions, and handling customer disputes. Transparency, security, and ethical operations are key. Trust is not built overnight; it requires consistent actions, technology advancements, and user verification. Risk management is crucial, and users should not put all their eggs in one basket or solely rely on centralized exchanges.

Q: How can users trust Binance considering the regulatory and legal issues it faces?

There have been misconceptions about our regulatory status. We are not banned from operating in the UK; we simply don't have a license there. We are actively working with regulators globally and have obtained 15 licenses in different countries. Licenses increase trust, but trust is also built over time with transparency, actions, and technology. Users should verify and judge the level of risk themselves. We aim to be as transparent as possible and continuously improve.

Q: How can companies like Binance prevent a collapse similar to FTX?

Companies need to focus on transparency, secure wallet infrastructure, strong teams, and independent operations. Loan platforms can be high-risk, and it's crucial to be cautious and identify strong, isolated businesses. Risk management, diversification, and continuous improvement are essential. No industry is without risks, and evolving technologies and user verification can help mitigate them.

Q: What are your plans for expanding in India?

Currently, India's tax policies make it challenging for a viable crypto business. The high tax rate discourages trading, leading to low transaction volumes. We are in conversations with industry associations and influential people to advocate for more crypto-friendly regulations. Until the tax situation improves, we don't see a viable business in India.

Q: How does Binance decide which tokens to list on the platform?

We have a selective process for listing tokens and projects on Binance. We consider factors such as the number of users, product-market fit, team strength, and several other matrices. Less than 1% of the projects that apply to us are listed. We aim to ensure a high standard of quality and value for our users.

Q: Are you open to taking external investor money for Binance?

We consider raising money strategically at times, as it can bring advantages like connections, partnerships, and influence. However, we are not in immediate need of capital and have reserves and positive cash flow. We are open to the possibility of raising money, but it's not a priority at the moment.

Q: What is an ideal regulatory framework for a company like Binance?

An ideal framework includes classification of crypto assets based on their characteristics, allowing exchanges to operate with offerings like spot, futures, earn, pay, and more. Stronger regulation on KYC, AML, security, and transparency is also important. Clarity on taxes and collaboration with banks is crucial for industry growth. Regulations should aim to encourage transparency and disclosure, ensuring users' protection and promoting the benefits of crypto technology.

Takeaways

In summary, Binance is taking measures to address the impact of the FTX collapse and increase transparency and credibility in the industry. While the collapse has short-term negative effects, there is potential for positive long-term outcomes. Binance is considering diversification but currently focuses on improving the user experience and lowering adoption barriers. The company aims to earn trust through transparency, secure infrastructure, and ethical operations. Binance's plans for expansion are contingent on crypto-friendly regulations in various countries. They have a selective process for listing tokens and are open to external funding if it aligns with their strategic goals. An ideal regulatory framework should involve the classification of crypto assets, transparency, collaboration with banks, and clarity on taxes. The goal is to promote responsible and sustainable growth in the crypto industry.

Summary & Key Takeaways

• Binance CEO discusses the suspension of deposits on Solana and FTX's collapse, stating that there may have been issues with the Solana network.

• The CEO acknowledges the negative impact of these events on the industry, including financial losses for consumers, decreased trust and credibility, increased regulatory scrutiny, and challenges in obtaining licenses.

• However, the CEO also believes that these events will lead to positive long-term effects, such as increased transparency in the industry.