As the famous saying goes, “once bitten, twice shy.” In the wake of the devastating collapse of FTX, crypto investors are worried that this could happen again.
Since FTX was the second-largest crypto exchange before its monumental collapse, it proved that no exchange is immune to a catastrophe like that.
Not surprisingly, Binance has now been under the microscope, with many wondering if it could be the next exchange to topple over after FTX.
Binance is currently the world’s biggest exchange and a trusted name among crypto traders and investors. Binance CEO Chanpeng Zhao – also known as CZ, has done his best to assure users that his exchange is different, and users need not worry.
Problems with Regulation
However, the crypto space remains unregulated, which is enough to raise flags of caution. In addition, Binance’s “proof of reserves” was heavily criticized, as it did not reveal much about the company’s internal financial control measures.
Furthermore, the company “temporarily” suspended withdrawals of the USDC cryptocurrency. CZ explained that this was to convert USDC into its native BUSD token to “retain large liquidity pools” and was nothing to be concerned about.
Considering how quickly the house of cards came tumbling down with FTX, investors could not be blamed for being on edge. According to some reports from earlier this week, investors withdrew as much as $3 billion from the exchange in 24 hours.
On Wednesday, however – CZ said that they had already seen money “flowing back” and that the withdrawals reflected “very normal market behavior.”
In an internal letter to staff published by Business Insider, CZ reassured his team that Binance is in “a strong financial position” and added, “Binance will survive any crypto winter.” That certainly is a bold claim.
Also, in the internal letter, he said, “While we expect the next several months to be bumpy, we will get past this challenging period – and we’ll be stronger for having been through it.”
Before FTX crumbled, Binance had expressed interest in buying the exchange – a deal they later backed out of when it became apparent that much of FTX’s empire was built on its native FTT token.
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