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Cardano’s Hoskinson Sees CZ’s Demise as an Issue for Metamask and Liquidity Providers

Last Updated November 24, 2023 4:27 PM
Josh Adams
Last Updated November 24, 2023 4:27 PM
Key Takeaways
  • Binance founder, Changpeng “CZ” Zhao, stepped down as CEO this week.
  • Now he faces at least 18 months behind bars for breaking money laundering rules.
  • Now Charles Hoskinson, the founder of Cardano, has weighed in.

In a November 22 video, Charles Hoskinson, the founder of Cardano, discussed the resignation of Changpeng Zhao (CZ), the former CEO of crypto exchange Binance. While Binance grew rapidly in crypto’s early days when few cared about regulation, Hoskinson says those wild days are ending. “Binance was the last holdout to that,” he said.

As the legacy financial world merges with crypto, Hoskinson warns that decentralized services like MetaMask and liquidity providers could soon face heat. He predicts authorities will try “capturing…all the core infrastructure” to control crypto.

Charles Hoskinson On CZ And The Crypto Crackdown

The Cardano founder spoke admiringly of his “friend”, the now-disgraced Binance founder, saying he epitomized the “move fast, grow, and innovate side of things.” 

Richard Tang, the new CEO of Binance, is “a very effective operator, a really smart guy.” Teng was previously director of corporate finance at the Monetary Authority of Singapore (MAS) and a chief regulatory officer of the Singapore Exchange (SGX).

Hoskinson notes how Janet Yellen and Merrick Garland  repeatedly mentioned “national security” when announcing Zhao’s surrender this week. Through this lens, crypto is a large and disruptive force that demands the authorities’ attention. “It really shows you how the US government thinks about these things,” remarked Hoskinson.

Furthermore, he explained that CZ and Binance weren’t brought down for outright fraud. Rather, Binance’s permissionless nature “invited” criminals and enemies to exploit it. Hence regulators stepped in.

Hoskinson believes the authorities aren’t done in capturing the key infrastructure that maintains the crypto industry. “I suspect that the US government is going to start hitting more providers of liquidity and also non-custodial wallets will likely get hit at some point, especially if they integrate MetaDexes, and these types of things. So, you know, perhaps MetaMask and others are going to get hit at some point.”

Fighting Back With Innovation

Yet Hoskinson remains optimistic that crypto innovators still “have a lot of power.” He says we must build regulated and confidential value transfer solutions. “We have to innovate, invest, and build better technology.”

Hoskinson points to advances like algorithmic law, regulated protocols, and zero-knowledge proofs. He also mentioned Midnight , Cardano’s private transaction protocol, as one innovation that achieves data confidentiality within regulatory bounds.

Ultimately, Hoskinson argues crypto is entering its “fourth generation,” which is the merging of decentralized networks with legacy systems. Choosing to avoid fiery rhetoric, he said concessions were needed on both sides.

While the crypto industry Hoskinson helped build disappears, he remains upbeat about crypto’s future. He wished CZ and Binance well and says entrepreneurs like CZ will return. Hoskinson called on the crypto community to adapt to the changing landscape. Though the path ahead is challenging, he believes crypto’s best days lie ahead.

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