Binance CEO Changpeng Zhao has compared FTX’s collapse to the 2008 financial crisis. Warning of “cascading effects“, he pointed out, “A lot of consumer confidence is shaken, and I think basically it’s taking us back a few years“.
Binance CEO discusses the impact of FTX’s collapse on the crypto-currency industry.
The CEO of crypto-currency exchange Binance, Changpeng Zhao (CZ), shared his thoughts on the potential impact of FTX’s collapse on the crypto-currency industry on Friday at a conference in Indonesia. FTX filed for Chapter 11 bankruptcy protection on Friday; Sam Bankman-Fried also stepped down as the company’s CEO.
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 chief added:
With this type of event happening, it’s devastating to the industry. Consumer confidence is shaken, and I think it sets us back a few years.
In addition, Changpeng Zhao stated, “With the fall of FTX, we will see cascading effects. Especially for those who are close to the FTX ecosystem, they will be negatively affected.“
Changpeng Zhao expects the crypto industry will likely face more regulatory scrutiny focused on capital requirements and deposit handling. However, he noted that it is “probably a good thing, to be honest“.
Following the FTX collapse, the White House and several U.S. lawmakers have called for appropriate regulation of crypto-currencies. Senator Elizabeth Warren (D-MA), for example, said that crypto needs a “more aggressive enforcement“, adding that it will continue to push the Securities and Exchange Commission (SEC) to “enforce the law.“
Binance was considering acquiring FTX and providing it with liquidity. However, after conducting due diligence, the crypto-currency exchange decided not to proceed with the acquisition, stating, “As a result of the company’s due diligence, as well as the latest news reports regarding mismanaged customer funds and alleged investigations by U.S. agencies, we have decided not to pursue the potential acquisition of FTX.com.“
The Binance boss believes the crypto-currency industry will eventually rebound, stressing at the conference in Indonesia, “The market will heal itself.”
Changpeng Zhao also tweeted on Sunday:
It may take some effort, but what else do we have to do? Let’s rebuild.