While the crypto ecosystem has been paralyzed for weeks by the FTX affair, one of its players is rubbing his hands. Changpeng Zhao, the CEO of Binance, has raised doubts about the reliability of his competitors, and seems to take a malicious pleasure in maintaining the doubt. But the strategy is perilous for “CZ”, which could see confidence in the ecosystem waver. A look back at his manoeuvres in recent days
Changpeng Zhao capitalizes on FTX crisis
It’s worth remembering: the FTX affair is the biggest crisis the crypto ecosystem has seen. Major players have been shaken, but even more noticeably, it is investor confidence that has been most damaged. Can we still trust central companies, even though the world’s second largest platform has turned out to be a house of cards? That is the question being asked, and Changpeng Zhao understands it well.
The Binance CEO has been raising questions about the solvency of Grayscale, whose GBTC product has been the subject of controversy this week. In a tweet that has since been deleted, Changpeng Zhao questioned the solvency of Grayscale. So much so that Brian Armstrong reacted publicly:
If you see FUD out there – remember, our financials are public (we’re a public company) https://t.co/ayzN0zaqgT
– Brian Armstrong (@brian_armstrong) November 22, 2022
Officially, however, Changpeng Zhao is not trying to undermine the competition. He communicated that he was not happy about FTX’s fall… Even though Sam Bankman-Fried felt in a leaked private conversation that the Binance CEO had coordinated an attack, and won the war.
Changpeng Zhao’s role in the ecosystem
This is the ambiguity of Changpeng Zhao’s position. The man has built a hegemonic empire, and communicates on his desire to secure the ecosystem. But one would have to be blind not to see that the CEO of Binance has turned the current crisis into a particularly effective communication operation.
In the space of a few weeks, he has announced an increase in the threshold of Binance’s emergency fund, proposed the creation of an inter-exchange emergency fund to deal with this type of crisis, published Binance’s addresses – where several tens of billions of dollars are stored – and reminded us that the company is still hiring… Among other communications aimed at highlighting Binance’s solidity.
This week, however, Changpeng Zhao regretted that the crisis had shaken the ecosystem and investor confidence to such an extent:
Some (including me) say this will “set the industry back a few years.” But thinking about it, this is natural. There will be failures with progress. Happened in regulated TradFi in 2008, after 70+ years of development. The industry will recover quickly, and become stronger.
– CZ Binance (@cz_binance) November 23, 2022
Some people (including me) say that this will “hold back the industry for several years”. But looking back, it’s natural. […] This happened in traditional regulated finance in 2008, after more than 70 years of development. “
Changpeng Zhao therefore sees the current crisis as a purge, and if it can weaken some competitors, why not? It is of course impossible to judge the sincerity of Binance’s CEO, but we note that the platform, which was already crushing the competition, will emerge from the affair even stronger.
