Binance organizes crypto consortium to revive confidence in blockchain industry
Binance, the largest crypto exchange, is seeking to revive confidence in the industry after an onslaught of hacks and fraud ravaged its reputation last year.
The company is helping to assemble a consortium of other businesses that want to prove how well the space can work with regulators.
Bringing Back Trust
As reported by CoinDesk, the consortium already includes several companies, ranging from individual projects, to exchanges, to blockchain analytics firms. The aim is to influence future 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 in combating criminal elements. While crypto is often criticized as a tool for money laundering and other illicit trade, industry leaders – including Binance CEO Changpeng Zhao – point to the openness of public blockchains as a hindrance to criminals, rather than a boon.
The consortium will not be run by Binance, but instead “in as decentralized a way as you possibly can among 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 that there is a mechanism in place to call out shortcomings and bad behavior in the industry, and help avoid major contagion problems, the person added.
Gemini – a cryptocurrency exchange owned by the Winklevoss twins – has argued for 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.
Reconstruction after FTX
The consortium’s formation was partly motivated by Sam Bankman-Fried (SBF)’s “unhealthy consolidation of power” in 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, imploded in November. The former manager has been widely accused of money laundering and fraud involving stealing users’ assets from FTX, and trading them with the latter firm.
After the companies filed for bankruptcy, Kraken CEO Jesse Powell sorry that the industry would be set back years of regulatory progress because of the reputation Bankman-Fried left behind.
In addition to FTX, the Celsius leadership at the crypto lending platform is slow exposed for committing a number of crimes while the company was still operating, including manipulating the CEL token’s price using customer deposits.
