Binance is currently the undisputed champion among cryptocurrency firms. After the FTX collapse, there remains little competition for the world’s largest exchange. However, many have expressed concern over the exchange’s ability to weather the current “crypto winter”.
The FTX fiasco has also led to a general lack of confidence among crypto survivors. Many people are waiting to see which dominoes may fall next, and if Binance will be one of them.
By volume, Binance is the biggest cryptocurrency exchange in the world. But, issues with regulators have dogged it. Potential criminal accusations for money laundering and sanction breaches against the platform have caused worry among many. Concerns about the firm increased last week when users withdrew assets worth billions of dollars from its platform. Crisis planning sessions were arranged by other cryptocurrency businesses to prepare for a worsening of Binance’s condition.
Will a Binance-level collapse end crypto?
There is some speculation on how Binance could collapse. The exchange could be utilizing its native coin, BNB, as loan collateral. The firm disputes this practice, but if it were true, it may expose the exchange to risks similar to those experienced by FTX’s FTT coin. If the market were to become uncomfortable about Binance’s health, the value of BNB may decrease. As a result, Binance would be unable to repay debts and would be forced to liquidate its holdings in the stablecoin, Tether. That may therefore make Tether, whose reserve structure has always been hazy, unable to keep its peg at $1.
Like with every collapse, Binance falling will undoubtedly hurt thousands or perhaps millions of people. However, it is unlikely to end crypto in general. The idea of decentralization and distributed ledgers will go on. Of course, there will be a lack of trust, as with the FTX collapse, but Binance is a far larger exchange, with a lot more people on board.
CEO Changpeng Zhao (CZ) stated that the firm and the cryptocurrency industry are going through a difficult time. He added that the sector is going through a “historic moment” in a memo to the staff. The upcoming months will be “bumpy,” CZ said, but he reassured his staff that Binance “would survive any crypto winter.”