On Tuesday (November 15), Changpeng Zhao (better known as “CZ”), Co-Founder and CEO of Binance, talked about “six principles that help to keep centralized exchanges safe and secure for users.”

On 11 November 2022, FTX Trading Ltd. (doing business as “FTX.com”) issued the following press release:

And here is how Sam Bankman-Fried (aka “SBF” on social media platforms), the Co-Founder of FTX.com, announced the collapse of the FTX empire:

The following video from Wall Street Journal nicely summarizes how FTX went bankrupt:

On 14 November 2022, the Binance CEO announced that Binance was “forming an industry recovery fund, to help projects who are otherwise strong, but in a liquidity crisis” and that it would welcome other industry players who wanted to join this effort:

Then, yesterday (15 November 2022), CZ published a blog post (titled “Six Commitments for Healthy Centralized Exchanges”), in which he said:

A few weeks ago, I published the guiding principles behind my style of management to answer questions about how I run Binance… In light of what happened last week, I felt compelled to expand upon these principles with the six most important requirements that Binance and every other centralized exchange should adopt in order to ensure trust with our users. We cannot let a few bad actors sully the reputation of this industry when it’s still in its infancy. 

Our role, first and foremost, must be to protect users. User funds must never be mismanaged and all measures must be maintained to keep user funds secure. Exchange operations should be transparent and we know Binance must lead by example.

He went on to list these six important principles:

  • “Be risk averse with user funds”
  • “Never use native tokens as collateral”
  • “Share live proof of assets”
  • “Keep strong reserves”
  • “Avoid excessive leverage”
  • “Strengthen & Enforce Security Protocols”