Justin Sun is advocating for more transparency from CEXs following FTX's collapse.
Justin Sun ponders that centralized exchanges (CEXs) can draw beneficial knowledge from decentralized finance (DeFi). The initiator and ambassador who constructed the Tron blockchain discussed this at a gathering at Philippine Blockchain Week in November 2022. The discussion typically circled the eye-catching dissolution of FTX and the greater effects of public opinion on crypto.
Justin Sun observed that at the core of the FTX fiasco lay a problem of limited information sharing between the CEX and its customers concerning how user funds were managed and how FTX allocated its resources. The Tron Founder likened this lack of clarity to DeFi, which allows smart contracts to execute and list each transaction straight onto a chain without any need from an intermediary.
The Tron founder’s comments make it clear that transparency should be at the heart of any successful crypto project. It’s a reminder to CEXs that they need to be more accountable and open about their operations to maintain the trust of their customers.
Sun’s call for greater transparency among CEXs is especially important in light of recent events. In particular, the FTX debacle has brought to light how opaque and unresponsive some exchanges can be regarding user funds. The lack of clarity surrounding FTX’s handling of user funds has led to a growing distrust amongst crypto traders, which could discourage new users from entering the space.
Justin Sun’s comments also highlight the need for better regulation and oversight in the industry. Currently, most CEXs are not subject to any form of regulation or supervision, meaning they can operate with little oversight and accountability. This lack of regulatory oversight makes it difficult for users to assess the safety of their funds and puts them at risk if something goes wrong.
The need for greater transparency and accountability among CEXs is clear, and Justin Sun comments provide a valuable reminder of the importance of this issue. CEXs can go a long way toward restoring trust in the industry and encouraging more people to get involved with crypto by ensuring users have access to accurate information about managing their funds.