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A debut interview from Binance’s new CEO leaves more questions than answers, Coinbase continues to flatter UK regulators, and Colombia’s new President courts Bitcoin lobbyists.
Following a record-breaking $4.3bn settlement with the US Department of Justice (DOJ), Binance’s new CEO faces an uphill battle to reinvent the crypto giant as a “compliance-led” company.
His first test came this week at the Financial Times’ Crypto and Digital Assets Summit, where Richard Teng faced off with the Financial Time’s Scott Chipolina by video link.
Throughout the interview, Teng was eager to distance himself from the DOJ settlement, calling the charges therein “historical issues” that Binance has “moved beyond”.
Teng also stuck to Binance’s line that the compliance failures in the settlement were not intentional but were the result of the company’s rapid growth.
“We became the largest crypto exchange within six months of our launch in 2017,” he said. “The compliance controls that we had in those very early days were inadequate for the size of the company.
“Going forward, we are focused on being a compliance-led organisation, allowing the company to prosper for the next six years, but also to be sustainable for the next 60 years.”
However, when asked several questions that might seem straightforward from a compliance perspective, Teng was unable to answer.
When asked where Binance’s global headquarters is located, Teng said the matter is “under consideration” and that Binance will “make an announcement on this in due course”.
When pushed for an answer, Teng responded by asking Chipolina: “Why do you feel so entitled to those answers?”
Turning to the topic of audits, Chipolina asked Teng whether Binance plans to submit to audit at “any point soon”.
“Our books are disclosed to the regulators. Auditors that work with us have that information,” said Teng.
“Can you name the auditors?” Chipolina asked.
“We work with many different auditors around the world,” Teng replied.
Financial health and user confidence
Despite the multiple enforcement actions taken against Binance in 2023, Teng insisted that Binance’s users still have “confidence” in the company.
He said that Binance’s user base has grown to more than 166m, and that institutional clients are returning to the platform following settlements with the DOJ and the Commodity Futures Trading Commission (CFTC).
However, a look at exchange trading volumes in 2023 tells a different story.
According to market analytics platform CoinGecko, Binance’s share of spot crypto-asset trading has fallen significantly during 2023, from a high of 65 percent to a low of 44 percent.
Finally, Teng highlighted that neither the DOJ, the CFTC or the Securities and Exchange Commission (SEC) — whose case against Binance is ongoing — allege that user funds have been misappropriated.
However, as covered by Vixio, Binance has resisted providing information to the SEC on how it custodies user funds.
Coinbase weighs in on Binance verdict
Another crypto CEO who is eager to move on from the Binance settlement is Coinbase’s Brian Armstrong.
This week, while visiting London for the Global Investment Summit, Armstrong said the crypto industry now has the opportunity to restart with a clean slate.
“There certainly have been a few bad actors in crypto,” he said. “I think we’ve had a moment with the enforcement action against Binance that’s allowing us to turn the page on that and close that chapter of crypto’s history.”
Armstrong also commented on the downfall of Bahamas-headquartered FTX, highlighting the lesson that building a crypto company offshore is “just not going to work”.
“Sometimes it’s easy to get big fast by skirting the rules, but you’ll always come crashing back down to reality,” he said.
Armstrong schmoozes UK regulators
Hosted by UK Prime Minister Rishi Sunak, the Global Investment Summit is a biannual event that attracts more than 200 CEOs of multinationals.
Coinbase said it was the “only pure-play digital asset platform” to receive an invitation to the summit, further demonstrating the “momentum for crypto around the world”.
On the sidelines of the event, Armstrong compared the UK’s regulatory landscape for digital assets favourably to that of the US.
He spoke of his frustration with the lack of “regulatory clarity” in the US, where the SEC’s complaint against Coinbase remains open, despite the company’s insistence that it “does not sell securities. End of story.”
“The UK is really a leader right now in terms of providing clarity,” he said. “A lot of that comes from the prime minister and the city minister and others that are really pushing clear policy out.”
Armstrong added that Coinbase has had “very productive engagement” with the Financial Conduct Authority (FCA), with only a “few technical matters”, such as staking and bank-to-crypto payments, that he feels require further action.
Is Colombia’s new President eyeing a Bitcoin bond launch?
Finally, Colombia looks like it could become the second country, after El Salvador, to prepare for government bonds backed by Bitcoin.
Last week, Colombia’s newly-elected President Gustavo Petro met with Samson Mow, CEO of Bitcoin tech company JAN3 and self-described “architect of the Bitcoin bond”.
“I’m surrounded by these blockchain guru friends,” Petro said in a video following the meeting. “We are going to open some working groups on public administration of the economy that can be promising for the prosperity of the people.”
In the crypto world, Mow is known as the brains behind El Salvador’s $1bn "Volcano Bitcoin Bond". The bond will be backed by Bitcoin mined using thermal energy, and its proceeds will go towards building El Salvador’s "Bitcoin City".
In January, El Salvador passed the Digital Securities Law, introducing a new legal framework for Bitcoin bond issuance.
However, El Salvadoran President Nayib Bukele is yet to give the go-ahead for issuance of the bond.
In April, Bukele said that market conditions were not yet right for the new bond to hit the market, following bank runs in the US and a stock market correction.
