With all the hurdles in the crypto market today, is it possible that Binance will suffer the same fate as FTX, Celsius, Voyager, BlockFi, Vauld, Hodlnaut, Three Arrows Capital, Alameda Research and others?
Although there’s always a possibility for everything, I believe that the chances are very little. In this article, I explain my thoughts.
Binance under Fire
These days, the biggest cryptocurrency company in the world, Binance, is under fire. Fears are emerging that Binance’s empire, may be on a shaky footing. Are these false accusations? Or is this another crypto company that’s about to collapse?
Several events have left investors wary of Binance’s credibility. CZ recently buried FTX after correctly identifying the risk of ownership of FTT tokens.
In response, investors want to see evidence of funding. Ironically, CZ was the voice calling for this. Binance then released the audit and the inspection results do not bring reassurance or embarrass investors.
On the other hand, investors have started to withdraw their funds from Binance. As a result, more than $3 billion in cryptocurrencies were removed in a single day.
Binance is not that helpful either
Another negative point for Binance is the decision to stop USDC withdrawals from the platform. There is no quicker way to destroy trust than to stop customers from withdrawing funds, especially USDC, which is considered one of the safest cryptocurrencies.
Binance claims that this is due to a token exchange. Nevertheless, this action is not likely to lead any investor with funds in Binance to have confidence in the platform.
Trust in brokerage firms is currently at its lowest level in the last 5 years. Investors are noticing that there is no convincing reason to keep their assets on a centralized platform.
So why should I risk on Binance when I have already lost assets on FTX, Celsius, Voyager or any other soon to be doomed platform – you might say?
How Possible is Binance To Collapse?
There is a very slim chance that Binance will end up like FTX and the other already doomed centralized cryptocurrency platforms.
- Firstly, Binance saw more withdrawals after the collapse of Luna and FTX. Today, Binance even says deposits are coming back.
- Second, BNB tokens will not be destroyed. If the crypto community loses confidence in Binance, the BNB token will be hit hard. However, we are still waiting to see how that happens. Ironically, BNB has outperformed both ETH and BTC in this down market, falling only 61% below its historical high.
- At the same time, it should be noted that the FTT token was performing well until the fraud was revealed. The FTT token has no real use outside of the FTX exchange, while the BNB is the native token of the Binance Smart Chain, transactions still occur on the BSC as usual.
Ironically, centralized investors are the most vulnerable. It would be erroneous to say that Binance can’t crash like FTX. But Binance has better leadership, a stronger balance sheet, and less counterparty risk than FTX.
For now, it’s all just coordinated FUD to undermine crypto market sentiment. Centralized exchanges are a current necessary evil. But we wait for regulation to allow investors to gain direct access to crypto assets via DeFi.