Regulators in the United States have a new target on their radar: Binance. The Commodity Futures Trading Commission (CFTC) has sued the world's largest cryptocurrency exchange by trading volume due to regulatory violations. The allegations range from insider trading to hiding office locations around the world to evade supervision by authorities.
Binance denies the claims, suggesting that another court battle between crypto companies and US regulators is just around the corner. On another front, the US arm of Binance must wait to close his $1 billion deal for Voyager Digital's assets until the Justice Department decides whether to appeal Voyager's bankruptcy plan.
Beyond the courts, signs that the crypto winter is fading are on the horizon. 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 the opportunities and challenges of Web3.
Binance CEO CZ Rejects Market Manipulation Allegations
Binance CEO Changpeng “CZ” Zhao has rejected accusations of market manipulation in response to a CFTC lawsuit, labeling it "an incomplete recitation of facts". According to Zhao, Binance "trades" in various situations, primarily to convert its crypto income to cover expenses in fiat or other cryptocurrencies. The CEO of the exchange also acknowledged that he has two personal accounts on Binance: one for Binance Card and one for cryptocurrencies. “I eat our own dog food and store my cryptocurrency on Binance.com. I also need to convert cryptocurrencies from time to time to pay for my personal expenses or the Card,” he added. Zhao said that Binance has a 90-day daily no trading rule for its staff and refuted claims that they engage in insider trading.
my response to the CFTC complaint | Binance Blog https://t.co/TadyotM7HN
—CZ Binance (@cz_binance) March 27, 2023
Galaxy Digital turns to profit after a $1B net loss in 2022
Galaxy Digital, the digital asset investment firm founded by billionaire Mike Novogratz, has become a profit after a net loss of $1 billion in 2022, with preliminary pre-tax income of $150 million from January 1, 2023 to March 24, 2023, according to the company. Novogratz says the results are from "opportunistic" strategic moves taken over the past few months and from Bitcoin (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 United States after terminating a $100 million deal to acquire digital asset custodian BitGo. Later in November, the firm disclosed $77 million of exposure to bankrupt cryptocurrency exchange FTX, with $48 million likely locked in withdrawals.
Disney reportedly scraps its metaverse division
The metaverse is about to disappear, at least for Disney. A restructuring plan designed to reduce operating expenses for $5.5 billion and laying off 7,000 employees for two months led the entertainment giant to divest its metaverse division. The 50 or so members of the metaverse division 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 transmission sector were two main factors that led to the decision. Former and current Disney CEOs Bob Chapek and Robert Iger once viewed the metaverse as a bullish investment opportunity.
Disney has abandoned a plan to develop its own membership program like Amazon Prime, according to @RhelanWSJ.
Disney also killed the division that was developing metaverse strategies, according to the report. https://t.co/mSm92XtqE0 pic.twitter.com/e2KqbxAC8i
—Scott Gustin (@ScottGustin) March 28, 2023
China to update national blockchain standards by 2025
Despite China's stance on cryptocurrencies, country officials have been actively developing their fintech industry, with a strong focus on blockchain technology. The Ministry of Industry and Information Technology, a watchdog for the Chinese fintech industry, has announced its plan to improve standards for blockchain technology development by 2025. The ministry has published a draft of its guidelines and invites Public opinion on blockchain development from "all walks of life." This move aligns 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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