Changpeng Zhao (CZ), the founder and CEO of Binance, the largest cryptocurrency exchange in the world, emphasized the importance of building trust in the industry during his speech at the Fintech Forward 2023 conference in Bahrain. His remarks came at a time when the ongoing fraud trial of Sam Bankman-Fried, the former CEO of FTX, a failed crypto exchange that used to rival Binance, was taking place.
During his speech, CZ highlighted various aspects of building trust in the crypto industry, according to a video posted on X, formerly Twitter. He emphasized the need for a track record of security, putting customers first, maintaining a good reputation, allowing third parties to validate services, and seeking regulatory compliance. CZ acknowledged that trust takes a long time to build but can be easily broken.
Binance said in a blog post that after FTX collapsed last year, the crypto industry experienced a “crisis of trust.” To overcome that crisis, in February the Binance development team launched a new Proof of Reserves (PoR) system, enabling customers to verify that the exchange holds their funds in full, plus additional reserves.
According to Bitcoin.com, while the new PoR system was still in development, Binance took steps immediately after FTX’s November collapse to reassure customers that their money was safe by publishing its wallet addresses. CZ said at the time that even though traditional banks run on “fractional reserves,” crypto exchanges should not, and they should strive to be fully transparent.
Meanwhile, Sam Bankman-Fried is facing a trial on seven charges, including defrauding investors and money laundering, according to NPR. If convicted on all charges, he could face more than 100 years in prison. Bankman-Fried founded FTX in 2019, and the exchange quickly gained a valuation of $32 billion. However, when it collapsed in 2022, billions of dollars were missing.
