Binance CEO Likens FTX Fiasco to 2008 Financial Crisis — Warns of ‘Cascading Effects’
Binance CEO Changpeng Zhao has compared the FTX collapse to the 2008 financial crisis. Warning of “cascading effects,” he stressed: “A lot of consumer confidence is shaken, and I think basically it sets us back a few years.”
Binance’s CEO Discusses the Impact of FTX’s Collapse on the Crypto Industry
The CEO of cryptocurrency exchange Binance, Changpeng Zhao (CZ), shared his thoughts on the potential impact that the collapse of FTX has on the crypto industry Friday at a conference in Indonesia. FTX filed for Chapter 11 bankruptcy Friday; Sam Bankman-Fried also stepped down as the CEO of the company.
When the moderator at the conference 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 for the industry. A lot of consumer confidence is shaken, and I think basically it sets us back a few years.
In addition, CZ opined: “With FTX going down, we will see cascading effects. Especially for those close to the FTX ecosystem, they will be negatively affected.”
Zhao expects the crypto industry will likely face more regulatory scrutiny focusing on capital requirements and handling of deposits. However, he noted that it is “probably a good thing, to be honest.”
Following the collapse of FTX, the White House and several U.S. lawmakers have called for proper cryptocurrency regulation. Senator Elizabeth Warren (D-MA), for example, said that crypto needs “more aggressive enforcement,” adding that she will keep pushing the Securities and Exchange Commission (SEC) to “enforce the law.”
Binance was considering acquiring FTX and providing liquidity. However, after performing due diligence, the crypto exchange decided not to proceed with the acquisition, stating: “As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of http://FTX.com.”
The Binance boss believes that the crypto industry will eventually bounce back, emphasizing at the conference in Indonesia: “The market will heal itself.”
Zhao also tweeted Sunday:
It may take some effort, but what else have we got to do? Let’s rebuild.
What do you think about the comments by Binance CEO Changpeng Zhao? Let us know in the comments section below.