A few weeks ago, the CEO of Binance, Changpeng Zhaoanticipated that the platform will create an industry recovery fund to support companies that are financially “healthy” and that have been unfairly seen affected by apparent FTX fraud.
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Changpeng Zhao, a Chinese-Canadian businessman positioned by Bloomberg Ranked 35th on the list of the world’s richest people with a net worth of $29.7 billion, he raised the six most important requirements that Binance and any other exchange centralized system should be adopted to ensure user trust.
“We can’t let a few bad actors tarnish the reputation of this industry when it’s still in its infancy. Our role, above all, must be to protect users. User funds should never be mismanaged and all measures must be maintained to keep them safe. Exchange operations must be transparent and we know that Binance must lead by example,” said the CEO of Binance.
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Within this framework, Changpeng Zhao established six principles that help keep centralized exchanges safe for users. :
-User funds should never be traded or invested.
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-We must proactively provide risk warnings to users so they understand volatility in cryptocurrencies.
-Native tokens are exchange tokens created by the company running the exchange
-Native tokens play an integral role in the functioning of blockchains and ensure the solid foundation of the blockchain
-A healthy native token is the lifeblood of a successful blockchain.
-Users must be able to trust the native token on which their blockchain is based.
-It is also necessary that there is a general utility.
-An example is the BNB chain, which is a censorship-resistant, decentralized, community-driven blockchain powered by BNB.
-Liquidity: The BNB auto-burn system keeps constantly reducing your total supply to 100,000,000 BNB. Made to provide greater transparency and predictability by adjusting the amount of BNB to burn based on the BNB price and the # of blocks generated on the BNB Smart Chain (BSC).
-Utility: Develop exciting dApps in a range of different verticals: gaming, decentralized social apps.
-As part of Binance’s ongoing commitment to transparency and building trust in the ecosystem, we have begun sharing details of key hot and cold wallet addresses.
-This is a starting point as we work to create a Merkle Tree Proof of Funds that we will share with the community in the coming weeks.
“We cannot let a few bad actors tarnish the reputation of this industry when it is still in its infancy,” the Binance CEO emphasized.
-Our goal is to enable users of our platform to make informed decisions that are aligned with their financial goals.
-Other industry players have already provided this transparency and we congratulate them on that effort and now we ask the entire industry to do the same to ensure that we can show that a few bad apples do not represent this industry.
-We created the SAFU fund to cover extreme circumstances. Currently, the fund has about 1,000 million dollars.
-Others in the industry should commit to doing something similar.
-It is not advisable to borrow to finance growth.
-There is simply too much volatility in cryptocurrencies – which is why Binance’s capital structure is debt free.
-We ask our industry peers to be similarly conservative from a fiscal point of view.
-Due to the rapid evolution of industry protocols and projects, it is necessary for the industry to form a better coalition to agree on the quality standards of security measures for exchanges and projects
-Strong collaboration with law enforcement is necessary to support investigations and recovery of stolen funds.
-We need a better incubation program to provide new projects with the appropriate security measures.
-To ensure greater clarity on the complex flow of assets through the blockchain, we need to be prepared to invest in on-chain analytics to address weaknesses in existing models. We must address them to ensure transparency.
-All exchanges must have strict KYC and AML measures.
“We call on all other centralized exchanges to adopt these proposals, because we all have a responsibility to the people who decide to invest their hard-earned money with us. It is up to us to show regulators and the community that a few bad actors are not the emblem of this industry,” Changpeng Zhao said. “Of course, I am open to a debate on these principles and I welcome input from the entire sector. Feel free to contact me via Twitter,” she added.