Binance CEO Brushes Off Rumors Amid Executive Departures

Binance CEO Changpeng ‘CZ’ Zhao took to Twitter to address the “negative reports” and speculations surrounding the company following the departure of several top executives.

Zhao Refutes Rumors

On September 7, Changpeng “CZ” Zhao, the co-founder and CEO of Binance, took to X (formerly Twitter) to address recent negative news. He attributed the prevailing negativity to creating an atmosphere characterized by FUD (fear, uncertainty, doubt) surrounding the cryptocurrency company.

Saw some debates in the community. When you do the right thing, and there is FUD, you don't have to do anything. The community defends you.

Let me summarize. There have been a lot of negative news/rumors, bank runs, lawsuits, closing of fiat channels, product wind downs,…

— CZ 🔶 Binance (@cz_binance) September 7, 2023

In his tweet, Zhao noted his observations of ongoing discussions within the community. He emphasized that when you’re on the right path, FUD should not prompt immediate action, as the community will rally in your support.

Zhao acknowledged the multitude of adverse news and rumors circulating, including issues like bank runs, legal disputes, fiat channel closures, product discontinuations, staff turnover, and market departures.

Nevertheless, he underlined that the company does not face liquidity problems. According to him, all withdrawals and deposits are managed effectively, and all customer funds are securely stored in the Secure Asset Fund for Users (SAFU) with 100% reservation.

SAFU, established by Binance Exchange in 2018, holds 10% of trading fees to safeguard customers in case of an exchange breach.

Zhao also highlighted the company’s successful court cases, adept handling of bank runs, significant deposits, the establishment of new fiat channels, seamless product transitions, recruitment efforts, and expansion into new markets.

Zhao concluded by suggesting that Binance likely has one of the lowest turnover rates among founding teams of tech startups of its size and age anywhere in the world.

Binance Issues

The recent tweet refuting negative news didn’t emerge from nowhere. In July, Binance witnessed the departure of several key executives, including Hon Ng (general counsel), Patrick Hillmann (chief strategy officer), and Steven Christie (SVP for compliance).

At that time, CZ dismissed the reports regarding these departures, contending that the explanations proposed by the “news” were entirely inaccurate.

There were also reports suggesting a significant reduction in Binance’s workforce. CZ again took to Twitter to counter media claims, emphasizing that the figures circulating in the media were inaccurate.

​​https://twitter.com/cz_binance/status/1677094113135427585?s=20

Aside from that, Binance will address the CyberConnect (CYBER) token incident by issuing its users a $1 million refund.

On September 7, the exchange noted that this event occurred due to a liquidity shortage affecting CYBER cross-chain bridges on the Upbit exchange in Korea. This led to a price discrepancy in CYBER tokens listed on Binance.

​​https://twitter.com/WhaleChart/status/1699840959947665723?s=20

Consequently, arbitrageurs borrowed CYBER from Binance to profit from the price difference. Unfortunately, users who had staked CYBER in Binance’s Flexible Earn Program could not redeem their assets because the staked tokens had been borrowed up to the limit.

The exchange explained that, apart from Proof-of-Stake (PoS) products, many of its flexible financial products generate income by lending users’ subscribed assets through margin or collateralized loans.

It added that in exceptional circumstances, borrowers may struggle to repay their loans promptly, or the redemption of subscribed assets may experience delays. This was the case on August 31, according to the statement.

However, to prevent similar situations in the future, Binance has announced measures such as raising interest rates on staked assets to discourage lending during periods of high token volatility.