Wednesday, July 24, 2024

Binance Chairman Changpeng Zhao warns of a “cascading” crypto crisis


The trillion-dollar digital asset market is facing a crisis similar to the 2008 financial crash, according to Binance Chairman Changpeng Zhao, who warned that more companies could fail in the coming weeks in the wake of troubles with FTX.

Zhao, founder of the world’s largest digital asset exchange, said that the full impact of the collapse of a rival crypto exchange is FTX Not yet felt. Speaking at a conference in Indonesia, he said the global financial crisis was “probably an accurate analogy” to this week’s events.

“As FTX goes down, we will see ripple effects,” Zhao said. “Especially for those who are close to the FTX ecosystem, they will be adversely affected.”

The comments come as cryptocurrency traders fear more waves of contagion after Zhao’s bid to buy FTX failed earlier this week, leaving one of the most prominent crypto exchanges teetering on the back. edge of collapse. Its failure would also deal a blow to major investors who have acquired shares in the group, including venture capital firm Sequoia and Japan’s SoftBank.

Bitcoin, the biggest CryptocurrencyIt has fallen 17 percent over the past five days, touching a two-year low amid turbulent negotiations between Binance and FTX CEO Sam Bankman-Fried.

Bankman-Fried has apologized for the liquidity crunch at FTX, but has not given a detailed account of what caused it.

“This lack of transparency is what every trader and investor would warn against moving forward,” said Anatoly Krashelov, CEO of Nickel Digital Asset Management.

Zhao also cast doubt on FTX’s deal to buy assets from another crypto lender, Voyager, from bankruptcy, saying FTX “obviously . . . will not have the money” for the $1.4 billion deal.

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“Some other projects will be in similar situations. I think it will take two weeks for most of them to come out,” Zhao said.

Genesis, a major cryptocurrency trading company, said its derivatives business has about $175 million stuck on the frozen exchange. The company said the funds are “not material to our business” and will not affect market making or trading functions.

But the head of Binance was confident that the crypto sector would eventually recover. “The market will heal itself,” Zhao said.

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