- Changpeng Zhao has reacted to recent remarks made by Jesse Powell on cryptocurrency regulation in the US.
- The CEO of Kraken pointed how inconsistently US officials regulate offshore crypto companies.
- Powell’s “self-centered” classification of on-shore and off-shore crypto firms was criticized by CZ.
Changpeng Zhao, CEO of Binance, is upset over Kraken CEO Jesse Powell’s usage of the word “offshore” about the cryptocurrency industry.
Following Caitlin Long, the CEO of Custodia Bank, who criticized American legislators and regulators for their misguided crackdown on the cryptocurrency industry, Jesse Powell made remarks on February 18 on offshore regulation. In his response to Long, Powell expressed dissatisfaction with how authorities treated regulated crypto companies in the United States compared to unregulated “offshore” companies. He said:
“I can’t tell you how infuriating it is to have pointed out massive red flags and illegal activity to regulators only to have them ignore the issues for years. ‘They’re offshore. It isn’t straightforward. We’re looking at everybody.'”
Earlier this month, Kraken had been ordered by SEC to end its staking practice and pay a $30 million fine for allegedly failing to register its staking program as a security.
In a Twitter thread on February 20, C.Z. expressed his dislike for using the word.
He pointed out that:
“The term’ offshore’ appears overly narrow-minded, self-centered, misses the broader picture, and is unhelpful to the development of our industry.”
Zhao disputed Jesse Powell’s classification of some cryptocurrency companies as offshore, asserting that the on-shore companies have performed equally poorly. The CEO of Binance referenced the situation of FTX.US, the American arm of Sam Bankman-defunct Fried’s crypto empire, and noted that fraud had occurred despite being subject to U.S. agency regulation.
Zhao tweeted:
Distinguishing “on-shore” and everyone else is self-centered and somewhat arrogant. Everyone is “on-shore” from their perspective. “We are better than everyone else” is not a panacea towards building a better industry.”
Changpeng Zhao praised Jesse Powell for his contributions to the cryptocurrency sector and challenged him to embrace diversity and openness and make positive and productive contributions to the world.
Zhao tweeted:
“I respect Jesse for what he has done for the industry and for always speaking his mind. But on this one, I have to point it out for his benefit. I apologize for saying it so directly. No harm meant.”
Binance to Comply with International Regulations
Despite Zhao’s views on on-shore and offshore business, his company must now comply with international regulations. On February 13, Paxos, a U.S. stablecoin partner of Binance, announced that it would discontinue generating Binance USD (BUSD) due to legal requirements.
Moreover, reports from the Wall Street Journal on February 15 indicated that Binance would pay fines to U.S. regulators to resolve regulatory investigations. On February 17, Zhao said that while Binance does not intend to remove U.S.-based cryptocurrencies from its exchange, it will probably decrease U.S. investments and bids and “seek permission first.”
