Since the FTX fiasco a big chunk of people seem to be preaching the end of crypto yet again. I mean, this is nothing new, but naively I thought this time the rational voices would outweigh the crazy ones, but I was wrong.
It seems like Binance has become, yet again, the center, the target of much of the FUD being spread online. The recent interviews given by Kevin O’leary, his claims in the FTX hearing on top of the “shocking” declarations of CZ on MSNBC seem to have everyone on edge.
But I think we are scaring ourselves here.
It’s my opinion that CZ did not answer anything incorrectly per say, except for the very end of the interview, but I’ll address that here in a minute.
The fear here is that Binance does not currently have a 1:1 asset ratio with their customer’s deposits. Of course, there is no way to do fractional reserves in crypto, and it’s almost hilarious that FTX was operating like a “real bank”, but CZ has said he does not operate in this matter, and for Binance this is not an issue.
When asked if he was asked to pay the 2 Billion dollar sum, if Binance could take it, he replied something that seems to have been interpreted in the worst way possible.
It seems to me he is responding about the possibility of paying back his profit with his selling of FTX stock. Meaning that because he was an early investor in FTX and allegedly made a lot of money when he was bought out, could he survive if he had to surrender that profit he made.
Him saying that he would let his lawyers handle it, seems in my opinion, to be the safest answer he could give here. He’s not the one who defrauded customers, and it’s not illegal to make a profit on the investments you make, so defending his gains, so to speak, makes perfect sense to me.
I should say I’m not defending Binance because I think them to be all good, mega benevolent or because I’m a CZ sycophant, as I’ve found some twitterinos to be. I’m simply trying to be fair and not let the bear market, the pain, the red, cloud my judgment in search of guilty people.
Regarding the ending of the interview…
He was asked about getting a reputable company to do a full audit on Binance. And it was obvious that this is something he’s not too interested in.
He pretended not to know of a company that can, and when he was told that Coinbase has a major audit firm working with them, he proceeded to say he had no clue about this.
Do I believe him? No, not really. I don’t think someone at his level is not aware of firms that work with crypto exchanges on any need such business would have. On top of that, he’s not alone on his business venture, and I’m sure he has a cabinet of trusted employees who handle a lot of these things.
So why would he lie? This, I don’t know. But I won’t automatically assume that it’s because Binance is insolvent or anything like that.
If you ask me, if I had to speculate. I would think that him staying away from regulators as much as possible has more to do with the fact that there are plenty of crimes being committed on his platform. Not necessarily by him, I should say, but they do happen.
Pump and dumps, insider trading, laundering… you name it, I’m sure it happens and often.
So what if Binance dies?
I don’t think, and of course, this is an opinion. That it would destroy crypto at all. As a matter of fact if Binance dies, it would simply allow for another giant to step in. I’ve been on this space long enough to see giant exchanges come and go, and every single time that happened, I saw people calling for the end.
It just seems like this time it truly could, because we’ve had a player as big as Binance, but this is technically true. If we deal with percentages of trades, of how much volume percentage they deal with, then we could argue MtGox was just as important back then.
Should we hedge?
It seems like a broken record type of advice to tell people to not leave money in exchanges, but from what I can tell, this is exactly what they want to do.
I don’t think anyone would be smart if they would put all their eggs in one basket, but then again you just might hit a homerun. I happen to adhere to the idea that you should hold in crypto assets only what you can do without. If that means 100 dollars, that means 100 dollars then….
We are full in the bear market at this point, but in my opinion, there’s not been enough blood on the streets yet to call a bottom. On top of that the cycles are 4 years or so, and we’ve not even completed the first year of the bear market.
I think we will probably see BTC hit 10k, a few more exchanges and projects go belly up, before things start turning around.
If you can stomach it, then you will reap the benefits, if you can’t, then I suggest you look for a healthier hobby.
As more me… this is time to HODL and learn.
MenO