In his first interview after FTX crashed in November, Binance chief Changpeng Zhao (CZ) insisted that Binance is a clean exchange — that it matches trades but doesn’t trade futures or act like a trading shop.
“We are a very clean and very simple business,” CZ said in an សួរខ្ញុំអ្វីក៏បាន (AMA) Twitter Spaces on November 15 — just a day after FTX fell. “We also don’t do futures trading ourselves. We don’t have a pawn-trading firm. So we aren’t trying to make money from trading ourselves…
“Lastly, we do have market makers and rely very heavily on third-party market-makers that provide liquidity,” he said. “There is one market-maker which I’m an investor and shareholder of, and that liquidity provider doesn’t make profits. So we try to just not lose money, so they just provide liquidity in the market and aren’t profit-driven.”
During the same interview, CZ admitted that one of Binance’s auditors was also an auditor for FTX, but didn’t mention the name. The FTX auditors who vetted its proof of reserves was Armanino LLP, but since the FTX implosion it has stopped offering crypto exchanges its vetting services.
However, yesterday’s complaint filed by the US Commodity Futures Trading Commission (CFTC) against Binance, CZ, and chief compliance officer, Samuel Lim, suggests that the firm most definitely is a trading shop. According to the suit filed in Chicago federal court, Binance has its own unregistered trading operation through its “quant desk.”