Recently, mainstream media has been dominating the crypto market with false information. Changpeng Zhao was in an interview with Bloomberg TV and Radio a while back and he made it his goal to clean the air. Additionally, he circled some interesting details on the current state of the crypto market.
After his Coinbase remark, CZ was branded a villain on Twitter for a few days. However, after today’s interview, it is obvious that Zhao is the boss of the crypto industry. CZ is confident that the crypto industry will thrive and endure for decades to come. He has few regrets, but one thing is certain: he fully understands how the DeFi ecosystem works.
CZ addresses several issues in the crypto market
First, the market was weakened by the contagion from the FTX collapse. Other dominoes will likely fall due to liquidity issues, just like Terra. When asked about the next big fish to fall, CZ clarified that the crypto industry will experience another contagion.
I think we’re going to see a bit of contagion. Whenever a major player goes down, especially a crypto trading platform, there are other people and institutions with money on the platform. We saw Genesis stopping withdrawals […] I think there will probably be one or two more[…] I don’t know how many.
According to recent reports, Genesis Global Capital has confirmed that it has recruited investment bank Moelis & Co. to explore ways to bolster liquidity at its crypto lending company. The company strives to meet customer needs and find a way out of bankruptcy.
Due to its exposure to defunct cryptocurrency exchange FTX, Genesis spent most of November raising funds or reaching an agreement with creditors. The company’s institutional lending department was forced to halt repayments and new lending last week. Additionally, Genesis previously stated that its derivatives division held around $175 million in locked money in its FTX trading account.
The infamous deleted tweet on Coinbase’s BTC holdings: This tweet has earned CZ a rogue reputation for days. When asked, CZ replied as follows:
I don’t think I tweeted about Grayscale, nor did I say Coinbase had liquidity issues. I was only referring to two articles [the disparity in holdings 650k and 600k BTC holdings] I understand that exchange is separate from custody. So I just posted it as a question […] This caused a lot of misunderstandings in the community, so I deleted the tweet.
Following the Twitter outcry, Changpeng Zhao was accused of taking out rivals and building a solo empire. This is a concern highlighted by Bloomberg and has put Zhao in a difficult position. He explains that decentralized finance, unlike traditional finance, requires greater transparency of holdings because nobody knows anything specific. Here’s what he had to say about the FTX incident and it’s full of regrets.
I’m actually thinking about the FTX situation and kind of blaming myself for tweeting that too late. I think as an industry we grew FTX too big before we questioned it on these things. I take the approach where we ask questions earlier.
Keeping pace with Changpeng Zhao
Good news is reaching the crypto industry today. CZ announced last week that Binance would set up a recovery fund to support projects that are otherwise robust but are experiencing a liquidity problem. According to Zhao, a blog post with significantly more information will be published later today.
We’re taking a casual approach where various industry players will contribute as they see fit. We’re restructuring so it can be fully public.
In addition, Zhao has slammed Bloomberg for publishing a false report about him and his recent business trips to Abu Dhabi. “This Bloomberg article was false and inaccurate.”
CZ has announced that the fund will be set up much earlier than expected. “The industry needs to save now and not in 2023.” He predicts that the industry will have recovered in a few months if the damage is repaired faster and more effectively.
The second key topic that emerged was his offering for FTX assets. In this sense, he indirectly labeled SBF as a scammer. He believes there are aspects of FTX that can be salvaged. Others not so much. Zhao and Binance have left enough leeway to consider FTX buying when the assets are up for sale. He turned to FTX books and stated:
So if we look at the data room, to be honest we quickly realized that a lot of money was missing [..] in the tens of billions. Given the amount of client funds they had, they must have shifted client funds. At this point, we assume that cheating is involved [..] and if you’re dealing with a scammer, I couldn’t trust any information in the data room […] I don’t think all the information we received was correct.
And when asked if the crypto market would survive if Genesis tanked, he said, “The industry will survive. The branch will have no problems […] That’s the beauty of decentralized finance, when a player goes down another notch to fill market share.”