Binance CZ On What The Crypto Community Can Learn From FTX

Binance CZ On What The Crypto Community Can Learn From FTX. 

The second largest crypto exchange FTX’s downfall has certainly taken the crypto community by surprise, Binance’s CEO however says there are lessons that can be learnt from this situation.

Don’t Use Personal Tokens

Just hours ago, Binance CEO Changpeng Zhao, also known as CZ, announced plans for his exchange to acquire This decision was made in order to help FTX out of their current liquidity crunch due to mass amounts of withdrawals from worried investors. 

CZ then recently took to Twitter to share his thoughts on the two valuable lessons that the crypto community could learn from FTX’s mistakes and current situation.

The first lesson was for crypto exchanges and companies to never use a token that they themselves created as collateral. This advice refers to the fact that Bankman-Fried found crypto hedge fund Alameda Research billions of dollars worth of its assets tied to the FTX token $FTT.

Binance has never used BNB for collateral,” CZ stated.

Related: FTX Sam Bankman-Fried Net Worth Falls By 93%, Loses Billionaire Status

Have A Large Reserve

The second lesson learnt from FTX’s mistakes was to have a large reserve and avoid borrowing funds, according to CZ. The Binance CEO also further goes on to state that he personally has never taken on debt for Binance.

The Binance CEO then goes on to further explain the importance of transparency with investors, explaining that Binance will soon release a breakdown of all of its reserves.

“All crypto exchanges should do merkle-tree proof-of-reserves. Banks run on fractional reserves. Crypto exchanges should not. Binance will start to do proof-of-reserves soon. Full transparency.” CZ stated.

Related: Here Is What Lead To The Collapse Of FTX Crypto Exchange

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