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Binance, the biggest exchange in crypto, seeks to revive trust in the industry after an onslaught of hacks and scams that ravaged its reputation last year.
The company is helping bring together a consortium of fellow businesses intent on proving how well the space can cooperate with regulators.
Bringing Back Trust
As reported by CoinDesk, the consortium already includes multiple companies, spanning from individual projects, to exchanges, to blockchain analytics firms. Its goal is to influence oncoming regulations by adopting a self-regulatory approach, proving the industry’s ability to cooperate with global laws.
This includes proving that industry participants are advanced when it comes to combatting criminal elements. While crypto is oft-criticized as a tool for money laundering and other illicit trade, industry leaders – including Binance CEO Changpeng Zhao – point to the transparency of public blockchains as being a hindrance to criminals, rather than a boon.
The consortium won’t be run by Binance, but instead “in as decentralized manner as you possibly can amongst many different projects to ensure an alignment with the community,” according to a source contacted by CoinDesk.
“[The creation of the group is] also to ensure there’s a mechanism in place to call out shortcomings and bad behavior in the industry, and help avoid larger contagion issues,” the person added.
Gemini – a cryptocurrency exchange owned by the Winklevoss twins – has advocated for a self-regulatory organization in crypto since at least 2018. SEC commissioner Hester Pierce – aka ‘Crypto Mom’ – also championed allowing crypto to self-regulate in a speech at the Texas Blockchain Summit in 2021.
Rebuilding After FTX
The consortium’s formation was partly motivated by Sam Bankman-Fried (SBF)’s “unhealthy consolidation of power” within the industry.
Once a billionaire and frequent media headliner, SBF quickly became the crypto industry’s biggest regret after both his FTX and its sister trading desk, Alameda Research, blew up in November. The former executive has been widely accused of money laundering and fraud involving stealing users’ assets from FTX, and trading them with the latter firm.
After the firms filed for bankruptcy, Kraken CEO Jesse Powell lamented that the industry would be set back on years of regulatory progress due to the reputation Bankman-Fried left behind.
Besides FTX, crypto lending platform Celsius leadership is slowly being exposed for committing a variety of crimes while the company still functioned, including manipulation of CEL token’s price using customer deposits.
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