The entire crypto industry witnessed the downfall of Sam Bankman Fried and his FTX empire. While this ticked off volatility in the market, the community feared that other exchanges could also endure a liquidity crisis. Binance, the world’s largest crypto exchange was hit with a question about its plan of action during a potential FTX-like scenario.
During a recent AMA session on Twitter, Binance’s CEO Changpeng Zhao addressed the downfall of centralized exchanges. While affirming that his exchange wasn’t facing any such issues, he said,
“We don’t have loans. We don’t have debt. We don’t owe anybody any money. We also did not give loans out of the platform. So we never take user assets and give it to a third party to manage and try to make yields.”
In addition to this, he pointed out that even if such a scenario arises, Binance entailed other means to survive. This would mean that the platform wouldn’t block withdrawals even if its centralized exchange was forced to shut down. Elaborating on the same, CZ added,
“If everybody withdraws their funds from the centralized exchange, we’ll just shut down the centralized exchange. We have many other profitable businesses that we have.”
Here’s who should invest in crypto as per CZ
The crypto-verse has grown throughout the years in value as well as adoption. While the industry continues to welcome new investors, CZ warned the community to be mindful about pouring in their money. He suggested that individuals should refrain from investing funds that they require “next week or next month.”
He said,
“….you should only be using discretionary cash that you don’t need for a long time, like maybe a couple of years.”
And for those who entail funds for crypto investments alone, the Binance CEO urged them to be wary of ‘guessing what’s going to happen.’ He noted that it is rather hard to predict. Therefore, it is better to hold as “we will go through a period of high volatility and unpredictableness.”