Binance CEO: ‘Our Judgement’ Is That XRP Is Not a Security

Siamak Masnavi

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."

Near the end of this AMA session (transcript posted on Binance's blog), CZ, the Binance CEO, answered the following question: "Do you have any announcement for 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:

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."

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

Steemit Moves to Limit Justin Sun’s Influence after Its Acquisition

Justin Sun, the founder of TRON, has announced he was going to acquire Steemit earlier this month, and shortly after those currently running the Steem blockchain executed a soft fork to limit his voting influence.

In a blog post describing the move, Steem’s witnesses [similar to bitcoin miners or EOS block producers] detailed that while it’s exciting to see a well-resourced entity get involved with Steemit, the witnesses are now moving to ensure the security of the Steem blockchain. The blog post reads:

To this end, we have updated to a temporary protective protocol to maintain the status quo currently established in regards to Steemit Inc's stake and its intended usage.

Steem is a delegated proof-of-stake (DPoS) blockchain, similar to EOS, in which a small number of entities – the witnesses – work to protect the blockchain and represent the community. The soft fork was deemed necessary because Steemit owns a large amount of STEEM tokens that could be used to take over the blockchain.

Given Justin Sun’s move to acquire Steemit, it’s believed he now owns those tokens and could use them to move Steemit in a specific direction. The soft fork blocks STEEM held by specific accounts from voting on who governs the network and from participating in ways that could see it seize control.

While the tokens have always been there, when co-founder Ned Scott ran the platform the community was comfortable with his approach to governance. Justin Sun has responded to the soft fork with an open letter to the Steemit community, in which he explains some of his potential plans for the Steemit platform itself.

The post reads:

We have so much to work to do to make Steemit.com the power that it really can be. And there are many ways we can get it there, from bridging TRX, TRC10’s and TRC20’s into Communities to marketing and growing Steemit.com. From invitations and referrals to simpler and instant signups.

Sun added his plans would also include listing STEEM on other major cryptocurrency exchanges and attracting large influencers to the platform, which is a mix of Reddit and Medium. He added he is organizing a summit called STEEMit 2.0 Town Hall, where he’s inviting the top 50 witnesses to participate.

It’s worth noting the Steem blockchain has several decentralized applications built on top of it, with Steemit being the most influential one.

Featured image by Ludovic Charlet on Unsplash.