Binance CEO Changpeng “CZ” Zhao has stated that users are more likely to lose cryptocurrency by storing it in a cold wallet rather than storing it on a centralized exchange.
“Asking most people, 99% of people today, to hold crypto on their own will result in them losing it,” he said in a Twitter Space discussion on Wednesday.
The exchange founder said his company was “neutral” on whether users wanted to hold their own crypto or put it on an exchange, but those practicalities make self-custody unrealistic for many. He was speaking a few hours after news broke that he had told his staff to brace for a “bumpy” few months.
“The majority of people are unable to back up their security keys; they will lose the device,” he said. “They will not have the proper encryption for their backup; they will write it on a piece of paper, someone else will see it, and they will steal those funds. Furthermore, if a person dies today, they do not have a way to leave something to their next of kin. We, on the other hand, have a standard operating procedure for that.”
CZ also stated that people who are technically capable of holding cryptocurrency safely should do so, but that the practice has its own set of issues.
“I always try to educate people so they understand the risks,” he explained. “Holding your own crypto in your wallet is not risk-free; in fact, I believe more people lose money holding their own—lose more crypto when they’re holding on their own than when they’re holding on a centralized exchange.”
Binance’s Business as usual
Not Your Keys, Not Your Coins saw a resurgence in the community following the demise of Binance’s rival FTX and the subsequent disclosures about its financial situation.
The expression alludes to the notion that cryptographic data stored using methods other than your very own special personal keys is not really yours.
As a result of the continued effects of FTX’s collapse, shaking investor confidence, Binance has seen billions of dollars withdrawn from its platform this week. The activity is “business as usual,” according to CZ.
He continued by saying that market sentiment was being impacted by the arrest of FTX founder Sam Bankman-Fried.
“I believe that following Sam Bankman Fried’s arrest, people tend to generalize. Therefore, if one bank hurts you, you’ll assume all banks are bad. You assume all politicians are corrupt if one is, the speaker said. “However, the truth is that just because one bank is bad, it doesn’t follow that all of them are, too. Additionally, not all politicians are bad just because one of them is.
If asked to testify before Congress, CZ responded that he would avoid traveling to Washington, D.C., in order to emphasize the division between Binance.com and the company’s U.S. operations.
“I’m also very busy traveling to numerous other nations […] I have nothing against visiting the United States; I think it’s fantastic. I enjoy the location, but, as you may know, I have other priorities.