Binance and CZ sued by CFTC over US regulatory violations

March 27, 2023 Coin Telegraph

Binance

The cryptocurrency exchange and its founder, Changpeng Zhao, have allegedly violated trading and derivatives rules.

The United States Commodity Futures Trading Commission has filed suit against Binance and CEO Changpeng “CZ” Zhao for trading violations, according to a Bloomberg report. The suit was filed in the U.S. District Court for the Northern District of Illinois.

According to the CFTC, Binance failed to meet its regulatory obligations by not properly registering with the derivatives regulator. The cryptocurrency exchange has been the focus of a CFTC investigation since 2021. The exchange acknowledged in February that it would likely face regulatory action in the United States and was already working with regulators.

In addition to the CFTC, Binance has been under investigation by the Internal Revenue Service and federal prosecutors, who have examined the exchange’s adherence to Anti-Money Laundering rules. Meanwhile, the Securities and Exchange Commission has been investigating whether Binance allowed U.S. traders to access unregistered securities.

Binance is the biggest cryptocurrency exchange with over $8.5 billion trading volume daily.

This is a developing story, and further information will be added as it becomes available.

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Binance ‘not planning any layoffs,’ 500 roles to be filled in H1

March 3, 2023 Coin Telegraph

BTC

A Binance spokesperson told Cointelegraph that they hired 600 people since January and have no imminent plans for layoffs.

Cryptocurrency exchange Binance is “not planning any layoffs” and is instead trying to fill another 500 roles by the end of June, according to a Binance spokesperson.

The comments came despite a huge spike in crypto layoffs in January — the majority of which were from crypto exchanges. In a statement, the Binance representative said:

“As of today, we are actively hiring for more than 500 roles with the goal of filling them by the end of H1 [...] We are not planning any layoffs.”

The spokesperson was responding to a request for clarification from Cointelegraph on March 1 regarding a tip it had received of possible redundancies at the crypto exchange. The latest comments appear to completely refute this speculation.

At the time of writing, Binance had 463 listings on its job openings page, with roles in business development, communications, customer support and engineering, to name a few.

*Some of the business development job openings at Binance. Source:* *Binance*

In January, Binance CEO Changpeng Zhao said that the firm was planning for a hiring spree in 2023, increasing its headcount by 15% to 30%, according to a Jan. 11 report from CNBC.

The spokesperson said that the company has hired more than 600 people since the start of 2023.

According to CoinGecko, 84.8% of the crypto layoffs in January were due to crypto exchanges reducing headcount, including Coinbase, Huobi, Blockchain.com, Crypto.com and Luno.

Coinbase announced it would be reducing its headcount by around 950 on Jan. 10, while Crypto.com announced on Jan. 13 that it would be reducing its workforce by around 500.

Binance has been regarded by some, such as Arcane, as one of the “winners” of 2022, with the fall of crypto exchange FTX and the implementation of zero-fee Bitcoin (BTC) trading leading to it capturing an overwhelming portion of the market.

On the other side of the coin, the exchange has also seen intense scrutiny. Most recently, this has revolved around the alleged shuffling of $1.8 billion in funds which some have compared to the actions of bankrupt crypto exchange FTX.

Binance used $1.8 billion in customer funds for its own purposes, similar to what FTX did

Here we go again
— Genevieve Roch-Decter, CFA (@GRDecter) February 28, 2023

Binance CEO Changpeng Zhao took to Twitter to respond to the allegations, labeling it “FUD” and suggesting it was standard practice for an exchange.

This year has had a tough start for those working in the crypto industry, with at least 14 firms and nearly 3,000 jobs being lost in January before a milder 570 layoffs in February.

But the tide could be turning, with the crypto market cap increasing by over 34% so far in 2023, according to CoinMarketCap, and other firms, such as USDC issuer Circle, also planning to go on a hiring spree.

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Binance CEO responds to mainstream FUD: ‘They don’t know how an exchange works’

February 28, 2023 Coin Telegraph

Binance

The co-founder and CEO of Binance, Changpeng Zhao, took to Twitter in response to a FUD-filled article published by Forbes about the exchange and its recent “shuffling” of funds.

In the aftermath of the FTX collapse, Forbes published an article focused on the recent “shuffling” of funds by the cryptocurrency exchange Binance.

However, the following day on Feb. 28, Binance co-founder and CEO Changpeng Zhao took to Twitter to tackle the FUD. In response to the article, the CEO said:

“They seem to not understand the basics of how an exchange works. Our users are free to withdraw their assets any time they want.”

In his series of tweets, he addressed various claims from the Forbes article. This included a “backroom maneuver” when Binance transferred $1.8 billion in stablecoin collateral to hedge funds such as Tron, Amber Group and Alameda Research between August and December 2022.

They called out Tron, Amber group, Alameda Research, etc. They seem to not understand the basics of how an exchange works. Our users are free to withdraw their assets any time they want. Their withdrawals are turned into “received hundreds of millions of shifted collateral.” 2/
— CZ Binance (@cz_binance) February 28, 2023

In light of the movement of funds, the article drew parallels between Binance and the now-defunct FTX in the lead-up to its demise. It also touched on the recent failed Voyager bid by Binance.US and the United States Securities and Exchange Commission’s planned legal action against Paxos Trust Company — the issuer of the Binance-branded stablecoin, Binance USD (BUSD).

On Feb. 10, 2022 Forbes announced that Binance would take a $200 million stake in the company as a strategic investment.

Though later in June a follow up report from Bloomsberg, CZ said the company’s investment agreement is “changing” after Forbes’ deal to go public fell through. In light of the article there has been no update on the situation.

However, in response to CZ, one Twitter user suggested he buy Forbes and “delete it,” to which CZ said, “not worth it.”

The article from Forbes comes after the New York Department of Financial Services (NYDFS) ordered the blockchain company Paxos Trust to terminate its issuance of BUSD.

On Feb. 13, it officially announced it would no longer be minting the stablecoins while giving them a redemption time period until February 2024. Binance says it still supports BUSD and is now looking into non-USD stablecoins.

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Crypto recruitment execs reveal the safest jobs amid layoff season

January 18, 2023 Coin Telegraph

Anthony Pompliano

The crypto industry has already seen more than 1,600 layoffs across the industry in the first two weeks of January.

Despite a wave of heavy crypto layoffs to start the new year, employees in technical and engineering roles, as well as senior management, will likely continue to see “strong demand” for their skills, recruitment professionals believe.

It’s been a tough first few weeks of 2023 for crypto businesses and their staff. Within just two weeks, the market has already seen more than 1,600 crypto-related job cuts as a result of continued market volatility and uncertainty.

However, not all departments have seen the same level of cuts.

SAFU: Senior-level tech and engineering

Rob Paone, founder and CEO of crypto recruitment firm Proof of Talent, told Cointelegraph that technical and engineering roles are by a “wide margin” the most in-demand jobs, even during bear markets.

He said his firm is still seeing “strong demand” for these functions, adding that these salaries are still “very competitive” despite “bidding war type scenarios” no longer being the case for these employees.

Johncy Agregado, director of crypto recruitment firm CapMan Consulting, said that it’s common for mid-level roles to be trimmed during a bear market, but said that senior functions tend to “double or triple” during a bear market.

Agregado added that roles such as chief technology officer and chief information security officer tend to be safe, because people in those positions have to maintain the fluidity of the business and keep “things in order” while the market corrects itself.

Not SAFU: ‘Non-mission critical’

Paone however said the jobs that crypto firms tend to cut first are “usually around” in-house recruiting, customer service, compliance, and anything “non-revenue or product generating.”

Investor and podcaster Anthony Pompliano — who is also the founder of crypto recruitment firm Inflection Points — said while each company approaches bear markets differently, he has historically seen the “non-mission critical jobs” affected most by layoffs.

These roles, according to Pompliano, are any roles outside of product, engineering, operations, customer service and management.

Commenting on the ongoing bear market, Pompliano said he has heard “numerous reports” of salary reductions in smaller companies, while others have put a freeze on raises and annual bonuses.

Paone also added that in some cases, even those in technical roles might not be able to entirely avoid job cuts, explaining that the crypto firms forced to make “deeper cuts” have had to reduce their engineering and product teams too.

Recent months have seen a string of crypto firms, particularly exchanges, cutting staff amid the market downturn.

Last week crypto exchanges Crypto.com and Coinbase both announced cuts to its global workforce.

Crypto.com CEO Kris Marszalek tweeted on Jan. 13 that the exchange had made the “difficult decision” to reduce its global workforce by “about 20%” because of the tough market conditions and recent industry events.

Meanwhile, Coinbase CEO Brian Armstrong announced on Jan. 10 that the exchange would cut 950 jobs as part of a plan to reduce operating costs by around 25% amid the ongoing crypto winter.

Crypto exchange Binance was one of few to announce the opposite, hinting at plans for a “hiring spree” in 2023 during a crypto conference in Switzerland.

However, Paone suggested that while crypto layoffs have been front and center, it hasn’t prompted crypto professionals to pivot away from the industry.

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Here’s how to quickly spot a deepfake crypto scam — cybersecurity execs

January 13, 2023 Coin Telegraph

blockchain security firm

The fast-paced nature of the crypto markets means investors are under massive pressure to quickly verify whether a video message is authentic or not.

Crypto investors have been urged to keep their eyes peeled for “deepfake” crypto scams to come, with the digital-doppelganger technology continuing to advance, making it harder for viewers to separate fact from fiction.

David Schwed, the chief operating officer of blockchain security firm Halborn, told Cointelegraph that the crypto industry is more “susceptible” to deepfakes than ever because “time is of the essence in making decisions,” which results in less time to verify the veracity of a video.

Deepfakes use deep learning artificial intelligence (AI) to create highly realistic digital content by manipulating and altering original media, such as swapping faces in videos, photos, and audio, according to OpenZeppelin technical writer Vlad Estoup.

Estoup noted that crypto scammers often use deepfake technology to creat fake videos of well-known personalities to execute scams.

An example of such a scam was a deepfake video of FTX’s former CEO in November, where scammers used old interview footage of Sam Bankman-Fried and a voice emulator to direct users to a malicious website promising to “double your cryptocurrency.”

Over the weekend, a verified account posing as FTX founder SBF posted dozens of copies of this deepfake video offering FTX users "compensation for the loss" in a phishing scam designed to drain their crypto wallets pic.twitter.com/3KoAPRJsya
— Jason Koebler (@jason_koebler) November 21, 2022

Schwed said that the volatile nature of crypto causes people to panic and take a “better safe than sorry” approach, which can lead to them getting suckered into deepfake scams. He noted:

“If a video of CZ is released claiming withdrawals will be halted within the hour, are you going to immediately withdraw your funds, or spend hours trying to figure out if the message is real?”

However, Estoup believes that while deepfake technology is advancing at a rapid rate, it’s not yet “indistinguishable from reality.”

How to spot a deepfake: Watch the eyes

Schwed suggests one useful way to quickly spot a deepfake is to watch when the subject blinks their eyes. If it looks unnatural, there’s a good chance it’s a deepfake.

This is due to the fact that deepfakes are generated using image files sourced on the internet, where the subject will usually have their eyes open, explains Schwed. Thus, in a deepfake, the blinking of the subject’s eyes needs to be simulated.

Hey @elonmusk & @TuckerCarlson have you seen, what I assume is #deepfake paid ad featuring both of you? @YouTube how is this allowed? This is getting out of hand, its not #FreeSpeech it’s straight #fraud: Musk Reveals Why He Financial Supports To Canadians https://t.co/IgoTbbl4fL pic.twitter.com/PRMfiyG3Pe
— Matt Dupuis (@MatthewDupuis) January 4, 2023

Schwed said the best identifier of course is to ask questions that only the real individual can answer, such as “what restaurant did we meet at for lunch last week?”

Estoup said there is also AI software available that can detect deepfakes and suggests one should look out for big technological improvements in this area.

He also gave some age-old advice: “If it’s too good to be true, it probably is.”

Last year, Binance’s chief communications officer, Patrick Hillman, revealed in an August blog post that a sophisticated scam was perpetrated using a deepfake of him.

Hillman noted that the team used previous news interviews and TV appearances over the years to create the deepfake and “fool several highly intelligent crypto members.”

He only became aware of this when he started to receive online messages thanking him for his time talking to project teams about potentially listing their assets on Binance.com.

Earlier this week, blockchain security firm SlowMist noted there were 303 blockchain security incidents in 2022, with 31.6% of them caused by phishing, rug pulls and other scams.

Voyager and Binance.US deal given initial nod amid national security probe

January 11, 2023 Coin Telegraph

Alameda

The deal has received initial approval from the bankruptcy judge but will require the approval of creditors and final court approval.

Bankrupt crypto lender Voyager Digital has received initial court approval for its proposal to sell its assets to Binance.US for $1.02 billion.

The approval comes amid a national security probe concerning Binance.US that Voyager is seeking to speed up.

On Jan. 10, Judge Michael Wiles of the United States Bankruptcy Court for the Southern District of New York allowed Voyager to enter into the asset purchase agreement and seek creditor approval, but the sale will not become final until a future court hearing, according to a Jan. 11 Reuters report.

It comes as Voyager wants to expedite a review of its proposal to sell assets to Binance.US, which could result in the deal being blocked or delayed.

Voyager’ attorney Joshua Sussberg noted during the court hearing that Voyager has been responding to questions from the Committee on Foreign Investment in the United States (CFIUS) and will address any concerns that CFIUS has which could see it oppose the transaction.

"We are coordinating with Binance and their attorneys to not only deal with that inquiry, but to voluntarily submit an application to move this process along," Sussberg said.

CFIUS is an inter-agency body that reviews foreign investments or acquisitions of U.S. companies for national security concerns.

If it determines that national security concerns regarding the deal are justified CFIUS can block or unwind the transaction or tell involved parties to alter the deal to mitigate concerns.

CFIUS filed a court notice on Dec. 30 indicating “one or more transactions contemplated” by Voyager could be subject to a review, resulting in possible blocks or delays.

Binance’s global entity is reportedly being probed by the U.S. attorney's office over money laundering allegations, but its CEO, Changpeng “CZ” Zhao, has stated Binance.US is a “fully independent entity” headquartered in California.

Zhao is a Chinese-born Canadian citizen and CFIUS is authorized to review any transactions that could result in foreign control of a U.S. business or thaaffords a foreign person an equity interest.

The Voyager Official Committee of Unsecured Creditors — a body representing creditors with no security interests in Voyager — supported the transaction in its current form, noting the deal would result in greater recoveries for creditors than if Voyager liquidated its holdings itself — which is what would occur if CFIUS blocks the transaction.

6/ This change, along with other agreed-upon terms reflected in the Amended APA (link below), has made the UCC comfortable with the transaction and garnered the UCC's support.
— Voyager Official Committee of Unsecured Creditors (@VoyagerUCC) January 10, 2023

Previously, objections to the acquisition proposal from Alameda Research, the Securities and Exchange Commission, four U.S. states and the U.S. trustee were rebutted by the bankrupt lender on Jan. 8.

Voyager claimed that the transaction is in the best interest of its creditors and the objections “fail to put forward any factual or legal support” for its arguments.

Voyager announced on Dec. 19 that it had agreed to Binance.US’s bid to acquire its assets for $1.022 billion, after a $1.4 billion deal with FTX.US fell through following the bankruptcy of the crypto exchange.

CZ

SAFU: Senior-level tech and engineering

Not SAFU: ‘Non-mission critical’

How to spot a deepfake: Watch the eyes

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