Binance CEO Dismisses Worries Over Increased Withdrawals

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Changpeng “CZ” Zhao, chief executive officer of Binance Holdings Ltd., batted off worries over a recent flurry of user withdrawals from the largest cryptocurrency exchange in the world, stating that users could easily withdraw all of their cash if necessary.

Speaking at a CNBC interview earlier today, CZ noted:

“People can withdraw 100% of the assets they have on Binance; we will not have an issue on any given day.”

When he said that Binance doesn’t use a fractional banking system, he was alluding to the practice of big banks, whereby they are permitted to lend a portion of the deposits made by their clients to borrowers. He asserted that crypto exchanges should “hold user assets 1-to-1, and that is what we do.”

Source: CNBC

Investor confidence in digital asset platforms is at an all-time low following the abrupt falls of Sam Bankman-Fried’s FTX crypto exchange and Alameda, which were brought on by a spike in withdrawals last month. Due to FTX’s swift collapse, numerous customers decided to seize control of their assets, which increased outflows on industry exchanges. On Tuesday, Binance had net withdrawals of around $1.14 billion, but later in the week, things stabilized.

Binance CEO Says Auditors Wary of Working With Crypto Exchanges

Many exchanges have tried to ease investor concerns by releasing piecemeal glimpses of their holdings, or so-called “proof-of-reserves,” which are insufficient substitutes for thorough financial audits and have not been successful in persuading investors.

When asked why his company had not chosen a comprehensive financial audit, Zhao responded that many audit companies were hesitant to cooperate with cryptocurrency companies for fear of harming their reputations. He noted that some people lack the knowledge necessary to examine cryptocurrency exchanges.

Finally, Zhao made a point of separating his business’ methods from those of FTX throughout the interview. According to officials, FTX is accused of mismanaging customer cash and using some of it to pay the debts of its sister trading company, Alameda Research.

 

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Azeez Mustapha

Azeez Mustapha is a trading professional, currency analyst, signals strategist, and funds manager with over ten years of experience within the financial field. As a blogger and finance author, he helps investors understand complex financial concepts, improve their investing skills, and learn how to manage their money.