In a recent interview, Richard Teng, the head of regional markets at Binance, dismissed comparisons between Binance and FTX, the crypto exchange that collapsed and filed for bankruptcy last year. Teng emphasized that Binance is financially secure and that any association between the two exchanges is unfounded.
“There were different rumors and FUD [fear, uncertainty and doubt] after FTX," Teng said in a Cointelegraph article. "People tried to associate us, which is totally untrue. Our assets are backed one-to-one.”
He stated that Binance has implemented measures to restore trust, including releasing Proof of Reserves (PoR) to allow users to verify their holdings.
The collapse of FTX in November resulted in billions of missing funds owed to creditors and had a significant impact on other crypto companies with exposure to FTX. In response to this crisis of trust, Binance introduced its PoR system, which aims to demonstrate that user funds are backed 1:1, plus additional reserves. Binance also clarified that the movement of funds between wallets is a regular operation for a crypto exchange and is not the same as what FTX did with its customers' funds.
Meanwhile, Sam Bankman-Fried, the founder and former CEO of FTX, is set to begin trial in the coming weeks for his alleged role in defrauding investors and customers. Bankman-Fried is facing multiple criminal fraud charges, and it was revealed that approximately one billion dollars of investor and customer funds were missing. Some have questioned the different enforcement priorities in the crypto industry, as Bankman-Fried seems to have received less severe consequences compared to other exchanges like Binance and Coinbase.
Prosecutors decided not to pursue a campaign finance violation charge Bankman-Fried was facing, prompting a Bitcoin.com analyst to raise concerns about "double standards" in enforcement in the crypto industry, Federal Newswire previously reported. Ben Friedman wrote in an opinion piece on Bitcoin.com that, although Bankman-Fried allegedly illegally directed more than $100 million from Alameda Research to hundreds of recipients, prompting the campaign finance violation charge, he seemed to be receiving “cushy treatment." "It’s hard not to notice the different enforcement priorities when it comes to cryptocurrency exchanges," Friedman wrote. "While exchanges like Binance and Coinbase faced regulatory action, FTX seems to have dodged similar consequences despite the serious allegations against its founder. This inconsistency makes us wonder if all crypto exchanges are held to the same standards."
The legal question surrounding Binance, highlighted by the U.S. Securities and Exchange Commission's (SEC) complaint, revolves around whether digital assets are considered securities. Financial news analyst Matt Levine noted that when the SEC is concerned about a bad actor stealing customers' money, they focus on that matter, as they did with FTX. However, when the money is not stolen, the SEC shifts their focus to illegal securities exchange activities.
