Crypto Biz: A spotlight on Binance, Galaxy Digital swings to profit, China’s blockchain push
Regulators in the United States have a fresh target on their radar: Binance. The Commodity Futures Trading Commission (CFTC) has sued the world’s biggest crypto exchange by trading volume for regulatory violations. Accusations range from insider trading to concealing office locations around the world to evade authorities’ oversight.
Binance denies the claims, suggesting another court battle between crypto firms and U.S. regulators is just around the corner. On another front, Binance’s U.S. arm must wait to close its $1 billion deal for Voyager Digital’s assets until the Department of Justice decides whether to appeal to Voyager’s bankruptcy plan.
Beyond the courts, signs that the crypto winter is fading away are on the horizon. Billionaire Mike Novogratz’s Galaxy Digital turned a profit after a $1 billion loss in 2022. Meanwhile, China keeps developing its fintech industry, with a strong emphasis on blockchain.
This week’s Crypto Biz examines how Binance is coping with ongoing fear, uncertainty and doubt (FUD) about its business, and how companies are navigating Web3 opportunities and challenges.
Binance CEO CZ rejects allegations of market manipulation
Binance CEO Changpeng “CZ” Zhao rejected accusations of market manipulation in response to a CFTC lawsuit, labeling it “an incomplete recitation of facts.” According to Zhao, Binance “trades” in several situations, mainly to convert its crypto revenue to cover expenses in fiat or other cryptocurrencies. The exchange’s CEO also acknowledged that he has two personal accounts at Binance: one for Binance Card and one for crypto holdings. “I eat our own dog food and store my crypto on Binance.com. I also need to convert crypto from time to time to pay for my personal expenses or for the Card,” he added. Zhao said Binance has a 90-day no-day-trading rule for its staff and refuted claims that they engage in insider trading.
Galaxy Digital swings to profit after $1B net loss in 2022
Galaxy Digital, the digital asset investment firm founded by billionaire Mike Novogratz, has swung to a profit after a net loss of $1 billion in 2022, with a preliminary pre-tax income of $150 million from Jan. 1, 2023, to March 24, 2023, according to the company. Novogratz says the results are from strategic moves “opportunistically” taken during the past months and Bitcoin’s (BTC) price recovery. Similarly to other companies operating in the crypto space, Galaxy found 2022 to be a challenging year. In August, it dropped plans to go public in the United States after terminating a $100-million deal to acquire digital asset custodian BitGo. Later in November, the firm disclosed $77 million of exposure to bankrupt cryptocurrency exchange FTX, with $48 million likely locked in withdrawals.
Disney reportedly scraps its metaverse division
The metaverse is on its way out, at least for Disney. A restructuring plan designed to cut operating expenses by $5.5 billion and lay off 7,000 employees over two months led the entertainment giant to ditch its metaverse division. All of the metaverse division’s 50 or so members will not be offered new employment contracts, except for Michael White, who led the broader consumer products unit. Unfavorable economic conditions and increased competition in the streaming sector were two main factors that led to the decision. Disney’s former and current chief executives, Bob Chapek and Robert Iger, once considered the metaverse a bullish investment opportunity.
China to upgrade national blockchain standards by 2025
Despite China’s stance on cryptocurrencies, the country’s officials have been actively developing its fintech industry, with a strong focus on blockchain technology. The Ministry of Industry and Information Technology, a watchdog for the Chinese fintech industry, has announced its plan to improve standards for blockchain technology development by 2025. The ministry has published a draft of its guidelines and invites public opinions on the blockchain development from “all walks of life.” This move aligns with China’s five-year plan for “National Economic and Social Development and Vision 2035,” in which blockchain is listed as a target to “grow stronger.”
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