A spotlight on Binance, Galaxy Digital swings to profit, China’s blockchain push
US regulators have a new target on their radar: Binance. The Commodity Futures Trading Commission (CFTC) has sued the world’s largest crypto exchange by trading volume for violating the regulations. The charges range from insider trading to hiding office locations around the world to avoid government oversight.
Binance denies the claims, suggesting that another legal battle between crypto firms and US regulators is just around the corner. On another front, Binance’s U.S. arm must wait to close its $1 billion deal for Voyager Digital’s assets until the Justice Department decides whether to appeal Voyager’s bankruptcy plan.
Outside of the courts, there are signs that the crypto winter is winding down. Billionaire Mike Novogratz’s Galaxy Digital turned a profit after a $1 billion loss in 2022. Meanwhile, China continues to develop its fintech industry, with a strong emphasis on blockchain.
This week’s Crypto Biz examines how Binance is dealing with ongoing fear, uncertainty and doubt (FUD) about its business, and how companies are navigating Web3 opportunities and challenges.
Binance CEO CZ denies allegations of market manipulation
Binance CEO Changpeng “CZ” Zhao dismissed the allegations of market manipulation in response to a CFTC lawsuit, calling it “an incomplete recitation of the facts.” According to Zhao, Binance “trades” in several situations, mainly to convert its crypto revenues to cover expenses in fiat or other cryptocurrencies. The exchange’s CEO also acknowledged that he has two personal accounts with Binance: one for Binance Card and one for crypto holdings. “I eat our own dog food and store crypto on Binance.com. I also have to convert crypto from time to time to pay for my personal expenses or for the card,” he added. Zhao said that Binance has a 90-day no-trade rule for its employees and refuted claims that it engages in insider trading.
Galaxy Digital turns profitable after $1 billion in net loss in 2022
Galaxy Digital, the digital asset investment firm founded by billionaire Mike Novogratz, has turned a profit after a net loss of $1 billion in 2022, with preliminary pretax income of $150 million from January 1, 2023, to March 24, 2023, according to the company. Novogratz says the results are from strategic moves “opportunistically” taken over the past few months and Bitcoin’s (BTC) price recovery. Like other companies operating in the crypto space, Galaxy found 2022 to be a challenging year. In August, it dropped plans to go public in the US after closing a $100 million deal to acquire custodian BitGo. Later in November, the firm disclosed $77 million in exposure to bankrupt cryptocurrency exchange FTX, with $48 million likely locked in withdrawals.
Disney is reportedly scrapping its metaverse division
The metaverse is on its way out, at least for Disney. A restructuring plan designed to cut operating costs by $5.5 billion and lay off 7,000 employees within two months led the entertainment giant to exit its metaverse division. All of the metaverse division’s 50 or so members will not be offered new employment contracts, except for Michael White, who led the broader consumer products unit. Unfavorable economic conditions and increased competition in the streaming sector were two main factors that led to the decision. Disney’s former and current CEOs, Bob Chapek and Robert Iger, once considered the metaverse a bullish investment opportunity.
China will upgrade national blockchain standards by 2025
Despite China’s stance on cryptocurrencies, the country’s officials have been actively developing its fintech industry, with a strong focus on blockchain technology. The Ministry of Industry and Information Technology, a watchdog for China’s fintech industry, has announced its plan to improve blockchain technology development standards by 2025. The ministry has published a draft of its guidelines and is inviting public opinions on blockchain development from “all walks of life.” This move is in line with China’s five-year plan for “National Economic and Social Development and Vision 2035,” in which blockchain is listed as a goal to “grow stronger.”
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