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Binance’s Zhao Goes Head-To-Head With Kraken’s Powell

Binance's Changpeng Zhao and JKraken's esse Powell
Binance's Changpeng Zhao and JKraken's esse Powell

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Binance CEO Changpeng Zhao has finally responded to the recent comments made by Kraken CEO Jesse Powell concerning how regulators treat offshore cryptocurrency firms in the United States. The comment comes after a February 18 post by the CEO of rival crypto exchange Kraken regarding a long Twitter thread shared by Custodia Bank CEO Caitlin Long.

Custodia Bank’s Caitlin Long’s Sparks Fire

In the thread, Long detailed how she handed over “evidence to law enforcement concerning probable crimes committed by a big crypto firm, starting months before that company imploded and stuck its millions of customers with losses, among other crimes.

Based on the tweets, Caitlin had also warned bank regulators of a mounting bank-run risk within financial institutions serving the crypto industry before the bank runs ultimately happened.

Her main objective in the long thread was to call out “American lawmakers and regulators for their misguided crackdown on the crypto industry.” In retaliation for her actions, the regulators targeted Custodia Bank, which had tried to become federally regulated, declining the application and disparaging it for daring to come through the front door despite that being the same result bipartisan policymakers claimed to want.

Kraken’s Jerome Powell Fuels The Fire

Powell’s response comprised his own frustrations with the attitude that regulators were demonstrating against U.S. regulated crypto firms, as compared to unregulated “offshore” entities. The Kraken executive said it was infuriating that someone [Caitlin] had pointed out many red flags and apparent illegal activity only for the regulators to ignore them for years with excuses such as “They are offshore, it is complicated, and we are looking at everybody for years, then to be used as their example.”

Binance CZ Putting Out The Fire

Binance’s Changpeng Zhao, alias C.Z., was responding to this comment in a Twitter thread, pointing out that the Kraken executive often used the term “offshore.” Based on C.Z.’s opinion, the term is extremely illiberal and does not add value to the development of the cryptocurrency industry.

The Binance executive focused on how Powell categorized certain crypto firms as being offshore, arguing that even the organizations that are considered ‘onshore’ did not fare any better. In his argument, the Binance CEO referred to the American subsidiary of Sam Bankman-Fried’s collapsed crypto empire, FTX US, saying:

Taking an “onshore” perspective, the issue discussed, http://FTX.US is an “onshore” exchange. SBF and FTX’s key execs are Americans. They spent a considerable amount of their time and efforts lobbying in the U.S. This did not stop fraud from being committed.

 C.Z. further explained that anyone who attempted to differentiate between onshore and everyone else was actually being “self-centered and somewhat arrogant.” In C.Z.’s opinion, we are all onshore, depending on our perspective. Citing the tweet, “We are better than everyone else” is not a panacea towards building a better industry.”

Nevertheless, C.Z. acknowledged all the contributions that Kraken’s Jesse Powell has made to the crypto sector.

I do 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, hopefully for his benefit. I apologize for saying it so directly. No harm meant.

C.Z. also urged Powell to embrace diversity and openness of mind even as he continues to be an enabler for productive and positive efforts toward the betterment of the industry and the world at large.

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