Changpeng Zhao defends Binance amid post-FTX scrutiny: ‘we are financially strong’

Binance (BNB-USD) co-founder and CEO Changpeng Zhao defended the financial soundness of his company on Thursday, as the cryptocurrency exchange has come under scrutiny following the spectacular bankruptcy of FTX (FTT-USD), its one-time biggest rival.

“We are financially strong,” the crypto pioneer, widely known in the crypto world as CZ, told CNBC, while also taking shots at the high-profile advertising and investments made by FTX and its founder Sam Bankman-Fried in the runup to the collapse of the Binance competitor.

“We don’t use customers’ money. We have revenue. Our revenue comes from trading fees and we have very solid revenue. We do not spend on crazy advertisements. We’re okay,” Zhao said.

The Binance CEO stressed that “well-run crypto exchanges,” like his, “should hold user assets one-to-one.” This comment alludes to charges that Bankman-Fried and FTX redirected user assets for other purposes.

CZ also directly took on some of his critics, especially Kevin O’Leary, the high-profile investor who has come under fire as an investor and paid spokesperson for FTX. O’Leary has publicly accused Binance of deliberately triggering FTX’s collapse.

“He’s making a bunch of nonsense claims and they don’t make sense, they don’t make any logic,” the Binance CEO said of the Shark Tank star.

Asked why Binance wouldn’t submit to a formal audit by one of the Big Four accounting firms, as part of an effort to reassure users that the company’s finances were sound, CZ argued that the issue largely stems from shortcomings in the accounting firms themselves.

“Many audit firms are scared to work with crypto businesses,” he said, adding that the larger players in the industry “don’t know how to audit crypto exchanges.”

The FTX scandal, which saw Bankman-Fried arrested earlier this week on charges of fraud, has put additional pressure on a crypto market that has already suffered tremendously in 2022.

Bitcoin (BTC-USD) reached a low for the year of $15,464.84 in the wake of the FTX implosion, although it has since rebounded, trading at around $17,430 in Thursday’s action. BTC-USD remains about 63% lower for 2022 as a whole.

Ethereum (ETH-USD) has seen similar trading. The crypto reached a 52-week low of $883.48 and has bounced back to around $1,270 by Thursday’s midday action. ETH-USD is down about 67% in 2022.

Meanwhile, a wide swath of crypto-related stocks has suffered along with their underlying assets. Here are some major crypto players and their year-to-date performances: MicroStrategy (MSTR) -66%, Coinbase Global (COIN) -85%, Silvergate Capital (SI) -87% and Riot Blockchain (RIOT) -83%.

For more on the overall crypto market, Seeking Alpha contributor Anna Sokolidou says to “stay away” from Bitcoin in 2023. Meanwhile, fellow SA contributor The Digital Trend argues that Cathie Wood might be right in her prediction that Bitcoin would eventually reach $1M.