Last night, CZ conducted a Twitter Spaces to clear the air on some critical questions about a new proof-of-reserve protocol, while reminding the community that for Binance the exchange is witnessing “business as usual”.
Following the recent unravelling of FTX and consequential contagion of major global crypto exchanges exposed to FTX and its native token FTT, the industry has witnessed a mass alert as users scramble to take assets off exchanges amidst ongoing allegations of halted withdrawals.
CZ however confirmed that the ongoing crisis was in fact a beneficial event for the crypto industry, stating that while there will be short-term losses, there would also be a major increase in transparency, as well as education for newcomers about the importance of self-custody that would make the industry more resilient in the long run.
On the Spaces, CZ added that Ethereum creator Vitalik Buterin would create a proof-of-reserves protocol in which Binance will step up to be the ”guinea pig”.
The founder also declared he will be working on establishing a global industry association immediately, consisting of the largest players in crypto to promote best practices and a single point of communication for regulators. According to CZ, this is in response to requests from “multiple regulators”.
Binance and proof-of-reserve
The exchange recently disclosed their crypto holdings in a blog post following the FTX drama. In a blog titled, “Our Commitment to Transparency,” Binance shared details of both hot and cold wallet addresses while working to create a Merkle Tree Proof of Reserve that will be shared publicly with the community.
Binance also announced they topped up their SAFU fund — an emergency insurance fund that was established in 2018 to better protect Binance users in extreme scenarios, which currently sits at US$1 billion. The fund will be used to help mitigate the effects of FTX contagion.
CZ also stated that the market crisis has not affected Binance’s portfolio companies. While the exchange had seen an increase in withdrawals, the company commented that it would “not experience any major impact”.
In a recent podcast, Anthony Sassano stated that even if there is a 1% chance of uncertainty, users should always remove their assets from an exchange and always live by the rule, “not your keys, not your crypto.”
In a move towards transparency, industry leaders from Kraken to Coinspot have flocked to social media to announce their holdings are 1:1 backed in a move to enhance confidence from their customers.
However, some exchanges have experienced “rumours” within small communication channels. But questions have raised concerns about their legitimacy.