Chief Executive Officer of Binance Changpeng Zhao (CZ), has stated the need to focus on rebuilding and safeguarding users by outlining six most important requirements that the exchange and every other centralized exchange should adopt in order to ensure trust with users
Zhao revealed this in a statement addressed to the crypto community on Tuesday, November 15th, 2022.
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According to the Binance boss “Exchange operations should be transparent and we know Binance must lead by example and our role, must be to protect users. User funds must never be mismanaged and all measures must be maintained to keep user funds secure.”
Below are the principles that Binance Boss outlines which help to keep centralized exchanges safe and secure for users:
- Be risk averse with user funds
User funds must never be traded or invested. We must provide risk warnings proactively for users so they understand the volatility across crypto.
- Never use native tokens as collateral
Native tokens are exchange tokens that are created by the company that runs the exchange.
Users need to be able to confidently depend on the native token their chosen blockchain relies on.
Share live proof of assets.
This is a starting point while we work to create a Merkle tree proof of funds that we will share with the community in the next few weeks.
- Keep strong reserves
We established the SAFU fund to cover extreme circumstances. Today, there is about $1b in the fund.
Others across the industry should commit to doing something similar.
- Avoid excessive leverage
It is unwise to take on debt to fund growth.
We call on our industry partners to be equally fiscally conservative.
- Strengthen and Enforce Security Protocols
Due to the fast evolving nature of industry and project protocols, there is a need for industry to form a better coalition to agree on standards for the quality of security measures for exchanges and projects.
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The statement explained that overall, every exchange has a responsibility to the people who decide to invest with them, noting that CZ emphasizes the importance of all centralized exchanges adopting the above stated principles to protect users, “ultimately, the onus is on the crypto exchanges to prove to regulators and the community that a few bad actors are not emblematic of the industry.”
