According to the company's initial bankruptcy petition, the failed crypto exchange FTX expects to have more than 1 million individual creditors spread among more than 100 entities in the larger group.
This morning, Binance's CEO Changpeng Zhao shared 6 principles to keep CEX healthy and secure for users.
1️⃣ User funds must never be traded or invested
- Provide users with proactive risk warnings so they can understand the volatility of cryptocurrency.
2️⃣ Never use native tokens as collateral
- Native tokens are exchange tokens that are created by the company that runs the exchange
Native tokens play an integral role in the running of blockchains and ensure the strong foundations for blockchain
- A healthy native token is the lifeblood of a successful blockchain.
- Users need to be able to confidently depend on the native token their chosen blockchain relies on.
There also needs to be widespread utility.
3️⃣ Share live proof of assets
- Share details of key hot and cold wallet addresses.
- Allow users to make informed decisions that are aligned with their financial goals.
4️⃣ Keep strong reserves
- Established the SAFU fund to cover extreme circumstances. Today, there is about $1b in the fund.
- Others across the industry should commit to doing something similar.
5️⃣ Avoid excessive leverage
- Do not take on debt to grow funds.
- There is simply too much volatility in crypto - that’s why Binance’s capital structure is debt free.
- The industry partners should be equally fiscally conservative.
6️⃣ Strengthen & Enforce Security Protocols
- Due to the fast-evolving nature of industry and project protocols, there is a need for the industry to form a better coalition to agree on standards for the quality of security measures for exchanges and projects
- Strong partnership with law enforcement is required to support investigations and recovery of stolen funds.
- There should be a better incubation program to equip new projects with appropriate security measures
- To ensure greater clarity of the complex flow of assets across the blockchain, be prepared to make investments in on-chain analysis to fix weaknesses in existing models.
- All exchanges should have strict KYC and AML measures in place.
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