FTX, Binance, and the ongoing market volatility: This is what CZ thinks of it all
Changpeng “CZ” Zhao, CEO of Binance, sharply cautioned novice and cash-strapped investors against trading cryptocurrencies. The CEO urged traders to do so especially in the face of the ongoing market volatility and unpredictability.
The CEO of Binance urged inexperienced investors to wait through the tumultuous moment rather than risking money needed for living expenses. The Binance CEO stated this an “Ask Me Anything” session led by him on Twitter on November 14. He also stated,
“You should not invest in crypto if you’re using money that you need for next week or next month, you should only be using discretionary cash that you don’t need for a long time, like maybe a couple of years.”
Zhao advised novice investors and traders to exercise caution before investing money in the market shortly for those who do have that extra cash.
Blame it on FTX
The crypto exchange leader also mentioned that,
“If you don’t know what’s going on, don’t try to guess what’s going to happen. It’s very hard to predict. So we will go through a period of high volatility and unpredictableness.”
The FTX problem has had a detrimental impact on the entire sector. Furthermore, several centralized exchanges have had to temporarily suspend withdrawals. This contributed to the increase in market volatility.
Zhao, however, reaffirmed that Binance witnessed no such problems. He cited the company’s balance sheet in response to the question of why users ought to keep their trust in the exchange:
“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.”
Zhao stated that Binance saw withdrawals in the wake of the FTX collapse and other incidents that eroded public support for controlled exchanges. He reiterated that even if Binance failed, the platform would still permit consumers to withdraw their money.
A fund to aid crypto projects
In the wake of the shocking collapse of FTX and the empire created by Sam Bankman-Fried, Binance plans to set up some recovery plans. The crypto exchange plans on establishing a fund to assist crypto enterprises in need of financial support.
Zhao, better known as CZ, stated that any business leaders “with cash who wish to co-invest” were invited to collaborate with Binance Labs on the initiative. Addressing the topic in detail, he stated,
“To reduce further cascading negative effects of FTX, Binance is forming an industry recovery fund, to help projects who are otherwise strong, but in a liquidity crisis.”
Although Zhao noted that the company’s investment partners included both centralized exchanges and decentralized protocols to provide customers a choice and help entrepreneurs in their endeavors, the Binance exchange itself is centralized.