Binance chief Changpeng “CZ” Zhao has suggested users are more likely to lose crypto by holding it in a cold wallet than by putting it on a centralized exchange.
“For most people, for 99% of people today, asking them to hold crypto on their own, they will end up losing it,” he said in a Twitter Space discussion held on Wednesday.
The exchange founder, who was speaking a few hours after news broke that he had told his staff to brace for a “bumpy” few months, said his company was “neutral” on whether users wanted to hold their own crypto or put it on an exchange, but suggested that practicalities make self-custody unrealistic for many.
“Most people are not able 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. And also today, very fundamentally, if a person passes away, they don’t have a way to give to their next of kin. Whereas we have a standard operating procedure [for that].”
CZ added that people who are technically capable of holding crypto safely should do so but claimed that the practice has its own issues.
“I always try to educate people so they understand there are risks,” he said. “Holding your own crypto in your wallet is not risk-free; I actually think more people lose money holding their own—lose more crypto when they’re holding on their own than on a centralized exchange.”
‘Business as usual’ at Binance
The collapse of Binance’s rival FTX and subsequent revelations about its financial position prompted a resurgence in the slogan “not your keys, not your coins” in the community.
The phrase refers to the idea that crypto stored using anything other than your very own unique personal keys are not technically yours.
This week, Binance has seen billions withdrawn from its platform as investor confidence has been shaken by the continued fallout of FTX’s collapse. CZ has insisted the activity is “business as usual.”
He added that the arrest of FTX founder Sam Bankman-Fried was having an effect on market sentiment.
“With Sam Bankman Fried’s arrest, I think people generalize. So if you get hurt by one bank, you’re gonna think all the other banks are bad. If one politician is corrupt, you think all politicians are corrupt,” he said. “But the fact is that because one bank is bad doesn’t mean all the other banks are bad. And just because one politician is bad doesn’t mean all the other politicians are bad.”
When asked if he would appear in D.C. if invited to testify before congress, CZ said he tries not to go to the U.S. in order to emphasize the separation between Binance.com and Binance’s U.S. business.
“I’m also quite busy visiting many other countries […] I’m not against traveling to the U.S.; I think the U.S. is great […] I like the place, but you know, I’m busy with my other priorities.”