On Tuesday (March 5th), Changpeng Zhao (also known simply as "CZ"), Co-Founder and CEO of Binance, held his second Ask Me Anything (AMA) session on Periscope, and during this session, he stated that Binance does not believe that XRP is a security and would continue to see XRP as innocent until proven "guilty". In this article, we take a closer look at how Binance has been "very supportive of XRP."
This was CZ's reply:
"People are aware that there is a lawsuit against XRP [he meant, Ripple, of course] on whether they are a security or not. Our judgement is that they are not. And until it's proven that they are, we listed them, and luckily we dragged other exchanges to list them. That's good thing... Just because there's a lawsuit doesn't mean they are guilty. So, we applied our judgement there, and we're always very supportive of XRP. There's a lot of guys who complain that it's overly centralized, but look, the market votes with their feet, and XRP is one of the largest market cap coins, and it's like that for a reason."
Now, let's try to focus on each of CZ's two main points.
XRP Should Be Presumed Innocent Until Proven Guilty
Pesumption of innocence is "the legal principle that one is considered innocent unless proven guilty;" this has been "traditionally expressed by the Latin maxim ei incumbit probatio qui dicit, non qui negat ('the burden of proof is on the one who declares, not on one who denies')." It is also "an international human right under the UN's Universal Declaration of Human Rights, Article 11."
Now, of course, XRP is a cryptocurrency and not a person, and the current class action against Ripple Labs, its subsidiary XRP II, and Ripple CEO Brad Garlinghouse, which claims that investors were sold unregistered securities (XRP tokens), is a matter of a civil law and not criminal law.
However, CZ has a good point. Just because there's a lawsuit against Ripple, it does not mean that XRP is "guilty", i.e. a security. That's why Binance decided to treat XRP as "not a security" until it has been proven that it is, and decided to offer XRP on its platform.
It's also worth pointing out that this was not the first time that the Binance CEO has expressed the view that XRP is not a security. For example, this is what he said on 12 December 2018:
The court case may take years. But if XRP is ruled as a security, it would seriously hurt a lot of US users, and to a certain extent, other users around the world too. It certainly doesn't look like a security to me, but that's just one person's opinion.— CZ Binance (@cz_binance) December 12, 2018
Also, it is highly interesting that California-headquartered crypto exchange Coinbase, which was afraid for a long time that XRP might be a security, finally decided to put aside its fears/worries, and listed XRP on Coinbase Pro (and later Coinbase.com) on February 25th, and it is doubtful that it would have decided to do so had its legal team not assured the management team that going ahead with listing XRP was a relatively safe decision.
Complaints About XRP Not Being Fully Decentralized
As CZ notes, there are a lot of people in the crypto space who "complain" that XRP is "overly centralized" (even despite Ripple CTO David Schwartz's many explanations of why these people are wrong) and that cryptocurrency exchanges such as Binance and Coinbase should not be listing XRP for this reason alone. CZ, however, believes that "one of the best ways to identify projects with value is the user base," and one thing that nobody can argue with it is that XRP has an extremely large and passionate "user base."
It's simple my friend, as I answered in a few podcasts recently, one of the best ways to identify projects with value is the user base. Xrp got that.— CZ Binance (@cz_binance) February 26, 2019
The market votes with their feet, not decentralization idealism.
Increase your user base, increase adoption.
Decentralization idealism is good, but if you don't have a product and user base to go with it, it is just idealism.— CZ Binance (@cz_binance) February 26, 2019
And he referred to this idea in his AMA session:
"... but look, the market votes with their feet, and XRP is one of the largest market cap coins, and it's like that for a reason."
Featured Image Courtesy of Binance