Binance, the world’s largest cryptocurrency exchange by trading volume, has released an update on how it’s responding to what CEO Changpeng Zhao called the potential Bitcoin civil war, now that the BCH and BSV forks are nearing. In short, Zhao said everything was business as usual, but that Binance was closely watching developments and would respond accordingly if necessary. He also touched on what he expects to happen with this fork situation going forward, and also responded to media criticism of Binance’s controversial launch of BSV trading last month.
Changpeng Zhao, CEO of Binance, stated that despite a decline in digital asset values following the failure of FTX, the cryptocurrency exchange has only experienced a minor increase in withdrawals and is otherwise working regularly.
Zhao said there had been “no news about significant withdrawals” from a number of “cold” cryptocurrency wallets the firm published details of in the wake of FTX’s bankruptcy during a live “ask me anything” session on Twitter on Monday.
Zhao acknowledged that withdrawals from Binance have increased “somewhat,” but he said that this was usual behaviour during periods of market fall for cryptocurrencies. We observe an increase in withdrawals whenever prices decline, according to Zhao. That is fairly typical.
After stubbornly bouncing around the $20,000 mark for months, bitcoin volatility returned last week as the market was roiled by reports of a liquidity crisis at FTX. On Monday afternoon in London, the price of one bitcoin was barely changing from the previous day, trading at $16,600.
When compared to possibly other platforms, Zhao said, “We have not seen like 80% withdrawn from our cold wallets, or 50% of funds flowing from our platform.” “For us, everything are continuing
Due to a lack of cash caused by investors leaving due to worries about its financial stability, FTX declared bankruptcy on Friday. After a brief period of due diligence, Binance withdrew its first bid to purchase the business.
Crypto burden
After a CoinDesk article revealed connections between FTX and its sibling business Alameda Research, FTX’s problems started.
Following that, Zhao tweeted that he would sell Binance’s $580 million hoard of the exchange’s native FTT token “due to recent revelations,” which led to a decline in the price of FTT and a massive outflow of funds from FTX.
On Monday, Zhao stated that although some have accused him of “whistleblowing or poking the bubble,” he was unaware that his tweet would result in such harm and that he had not intended to cause “turmoil” in the cryptocurrency markets.
Zhao predicted that “there would be some cascading contagion effects” in response to the probability that other participants could experience a crisis following the demise of FTX. Over time, he added, the severity of crypto company failures and the price declines they cause will diminish.
The huge one frequently falls first in situations like this, according to Zhao. The cascading impacts get progressively smaller.
This year’s cryptocurrency crisis was mostly caused by a confluence of companies that owed money to others and had their reserves locked up in illiquid tokens.
The two primary tokens of Terra, a $60 billion stablecoin project, lost all of their value in May when its technological model’s viability was called into doubt. Following a spate of cryptocurrency failures, Celsius, Three Arrows Capital, and Voyager Digital all sought
Zhao predicted that everything will vanish in a few years following the collapse of FTX and the consequent crypto selloff. People might not even recall this,
Zhao had previously stated that Binance would create an “industry recovery fund” to assist struggling businesses and “reduce further cascading negative effects.” Although there are few details about the fund, the CEO of Binance promised that more would be revealed soon.
Binance Labs is a venture capital firm that invests in cryptocurrency companies. Since his portfolio companies are “far less harmed” than other companies in the sector, Zhao hasn’t yet heard any “huge screams for help.”
Zhao’s statements matched those made earlier on Monday by Crypto.com CEO Kris Marszalek, who responded to worries of a liquidity crisis akin to the FTX by saying his company had a “tremendously robust balance sheet” and wasn’t having any issue with a spike in withdrawals.
He said, “As a corporation, we never engaged in any reckless lending practises, we never assumed any third-party risks.
According to CNBC on Sunday, Alameda Research, FTX’s sister firm, borrowed billions in client cash from the exchange to make sure it had enough money on hand to handle withdrawals.
Bankman-Fried stated its recent bankruptcy case was the consequence of problems with a leveraged trading position but declined to comment on claims of misappropriating customer monies.
