A statement from an official doc of the Coinbase a while back about the Coinbase users’ crypto assets bankruptcy protection has left users of other cryptocurrency exchanges in dismay, prompting Binance’s CEO to clear the air on this.
Recently, Changpeng Zhao, the CEO of the largest cryptocurrency exchange by trading volume, had a ask me anything session; different topics like resuming Luna trading, the future of BNB, and how they handle users’ funds were discussed, which the aspect of users funds was where a large percentage of audience concentrated their interests, of course, everyone would want to secure their funds.
CZ cleared the air saying that Binance doesn’t mix user funds with the exchange’s operational funds. So should anything go wrong, Binance users will not lose everything.
According to him:
“If the trading platform goes bankrupt, users would be refunded first before considering the shareholders. Binance User funds are never mixed with operational funds. In the event of any bankruptcy or similar event, funds would be refunded to users first, before any shareholders.”
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CZ Concerns About Users’ Protection
CZ has always been concerned about the protection of retail users over major investors. Following the recent Terra crash, he advised the Terra team to prioritize retailers over major investors.
Binance CEO suggested this even though its $1.6 billion worth of LUNA holdings turned to $3000 following the crash of Terra Labs ecosystem tokens.
“To lead by example on PROTECTING USERS, Binance will let this go and ask the Terra project team to compensate the retail users first, Binance last, if ever,” CZ said in a tweet last week.
He also expressed his concerns about other issues concerning Terra; he said investors would not have suffered major losses should Terra have deployed its reserve earlier than it did.
Recently, there have been growing concerns about Coinbase users protection after the exchange said in its recent earnings report that “the crypto assets we hold in custody on behalf of our customers could be subject to bankruptcy proceedings.”
Do you think Coinbase needs to adopt this system? Express your thoughts by commenting below.
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