Binance CEO Changpeng Zhao has compared the FTX collapse to the 2008 financial crisis. He warned of “cascading effects,” emphasizing: “Consumer confidence is being severely shaken, and I think that’s basically throwing us back a few years.”
Binance CEO Discusses Impact of FTX Collapse on Crypto Industry
Cryptocurrency exchange Binance CEO Changpeng Zhao (CZ) shared his thoughts on the potential impact of FTX collapse on the crypto industry at a conference in Indonesia on Friday. FTX Filed For Chapter 11 Bankruptcy Friday; Sam Bankman-Fried also stepped down as CEO of the company.
When the conference moderator compared the FTX fiasco to the 2008 financial crisis, Zhao commented, “I think that’s probably an accurate analogy.” The Binance CEO added:
This type of event is devastating for the industry. A lot of consumer confidence has been shaken and I think that basically puts us back a couple of years.
Additionally, CZ opined, “If FTX goes down, we will see cascading effects. Especially those close to the FTX ecosystem will be negatively impacted.”
Zhao anticipates that the crypto industry will likely face increased regulatory scrutiny focused on capital requirements and deposit handling. However, he did note that it’s “probably a good thing, to be honest.”
Following FTX’s collapse, the White House and several US lawmakers have called for proper regulation of the cryptocurrency. Senator Elizabeth Warren (DMA), for example, said that crypto needs “more aggressive enforcement,” adding that she will continue to urge the Securities and Exchange Commission (SEC) to “enforce the law.”
Binance considered acquiring FTX and providing liquidity. However, after conducting due diligence, the crypto exchange decided not to proceed with the acquisition, stating, “Based on the company’s due diligence, as well as the latest news reports of mishandled customer funds and alleged US agency investigations, we have decided that we will do not pursue the potential acquisition of http://FTX.com.”
The Binance CEO believes that the crypto industry will eventually bounce back, stressing at the conference in Indonesia that “the market will heal itself.”
Zhao also tweeted on Sunday:
It may take some effort, but what else do we have to do? Let’s rebuild.
What do you think of Binance CEO Changpeng Zhao’s comments? Let us know in the comment section below.
Kevin Helms
photo credit: Shutterstock, Pixabay, WikiCommons
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