Is Binance’s BNB comparable to FTX’s FTT? CZ speaks his mind on crypto
Is Binance’s BNB comparable to FTX’s FTT? CZ speaks his mind on crypto
Crypto

Is Binance’s BNB comparable to FTX’s FTT? CZ speaks his mind on crypto

By Alessia Pannone - 28 Nov 2022

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According to Willy Woo‘s tweet, BNB, the native crypto on the Binance exchange, could replicate a similar pattern to that of FTT, FTX‘s native token. The latter, which collapsed a few weeks ago, brought the entire cryptocurrency market to its knees. 

Apparently, BNB would make up a large part of Binance’s SAFU insurance fund, which is about $1 billion. However, in his list of commandments, CZ insists that an exchange should never use its tokens as collateral.

The concern raised by Willy Woo about Binance’s BNB

A few days ago, a tweet by Willy Woo, the Bitcoin analyst and co-founder of Hypersheet, unleashed further fears in the blockchain world.

“The Binance $1b SAFU insurance fund today:

BNB: $367m (44%)

BUSD: $300m (32%)

BTC: $270m (24%)

While I commend Binance for having such a fund, there’s no sense putting incidence-correlated BNB in there.

How would we feel about FTX having an insurance fund filled with FTT?”

According to Willy Woo, the fear raised by him about Binance and the BNB crypto is justified by the recent tragic experience with the FTX collapse

Indeed, during the collapse of the exchange, the price of the FTT token, which went from $22 to $2 in 48 hours, was sent from the fund. Thus, an insurance fund based on it would be completely wiped out.

According to Woo, a fund that relies, even in part, on BNB will inevitably suffer from the health of the exchange at the crucial moment when it is rightly called upon. And the situation may require the use of such a fund.

In any case, the factor that makes the difference is the fact that there is a fund wholly owned by Binance and, moreover, it does not make loans to other organizations as FTX had done. 

Also, it should be acknowledged that since its creation, CZ, the head of Binance, has continued to add utility to his BNB token. Thus, the fundamentals of BNB are anything but similar to those of FTT. 

Indeed, all the mechanisms adopted by Changpeng Zhao so far have always been aimed at protecting users and exploiting the trust they place in Binance. 

The composition of the SAFU fund and CZ’s response to BNB’s defense of Binance 

Binance’s SAFU insurance fund is reportedly currently composed of $367 million in BNB (44%), $300 million in BUSD (32%), and $270 million in BTC (24%).

Regarding the allegations raised by Woo, CZ seeks to provide explanations on Twitter. Specifically, explaining that the SAFU fund is usually divided into three equal parts between BNB, BUSD and BTC. 

However, the increase in the price of BNB since the last rebalancing has changed these proportions. CZ’s official account reads: 

“Binance SAFU insurance fund ($1 billion USD equ) is roughly split between BTC, BUSD, and BNB. Just that BNB price rose faster than BTC since last rebalance.

Yesterday, Binance allocated ANOTHER $1 billion to the industry recover initiative.

Both publicly on the blockchain.”

In a time of doubt and uncertainty such as the crypto market is going through, clarity and transparency are the best weapons to prevent the collapse of user and investor confidence. 

Indeed, the CEO of Binance is trying hard to reassure his customers, as weakened trust could falter at any time due to bad news or misunderstood information. 

Hence, there is a call for caution on exchanges in the depths of this bearish market. Furthermore, CZ takes this opportunity to announce that it is providing an additional $1 billion to its cryptocurrency industry support fund.

CZ on crypto: adoption will happen regardless of government decisions 

Recently, CZ said that cryptocurrency adoption will happen regardless of government decisions on regulation. 

Indeed, the CEO of Binance stated that countries would be better off regulating crypto rather than fighting them, arguing that their adoption will happen regardless. 

During a Binance event in Athens, Greece, on Friday, CZ noted that cryptocurrency regulation has once again become a hot topic amid the recent fallout from the FTX cryptocurrency exchange. In this regard, he advised countries to propose regulations rather than opposition to the cryptocurrency sector.

“I think most governments now understand that adoption will happen regardless. It’s better to regulate the industry instead of trying to fight it.”

In addition, CZ compared the FTX collapse to the 2008 financial crisis, saying the industry will be able to recover.

“It has been a very bad year, too many things have happened in the last two months. I think we see now that the industry is healthier. Just because it happened to FTX doesn’t mean every other business is bad.”

The CEO also remained optimistic about Bitcoin adoption. When asked if he thought countries might start adding cryptocurrencies like Bitcoin to their reserves in the future, Zhao said he expected so, particularly for countries that did not have their own currency.

CZ of Binance is not alone in his optimistic view of the cryptocurrency industry. As reported, leading Wall Street strategist Thomas Lee, who is also co-founder of Fundstrat Global Advisors, believes cryptocurrencies will re-emerge despite a lackluster performance in 2022. 

In fact, Lee said the current bear market in cryptocurrencies is nothing new. He noted that the cryptocurrency industry suffered a similar slump in 2018, when Bitcoin lost more than 70% of its value from all-time highs. 

According to Lee, what is happening now as a result of FTX is not much different from what happened in 2018 with Bitcoin, when it went from $17,000 to something around $1,200

Despite the crisis and difficulties, that was the time when some of the best projects were created. 

Alessia Pannone

Graduated in communication sciences, currently student of the master's degree course in publishing and writing. Writer of articles from an SEO perspective, with care for indexing in search engines.

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