'They Just Couldn't Have So Much Cash': Binance CEO On His FTX 'Hunches' And Importance Of Stablecoins In Bear Market

Binance CEO Changpeng Zhao shrugged off speculation about stablecoins like BUSD BUSD/USD getting outlawed by regulators in the United States, saying that it was akin to asking if the Moon may disappear tomorrow.

Taking part in a Twitter Space, “CZ,” as he is known in the crypto community, also said BUSD will not be at the forefront for regulators right now and that crypto exchanges will remain the center of attraction, especially after the FTX fiasco and large transfers of Ether ETH/USD from Crypto.com to its rival exchange Gate.io.

Responding to queries concerning news reports that Binance’s reserves are full of its own token BUSD, Zhao said it was “very normal” for exchanges to have large reserves of stablecoins because in a market downturn, users prefer stablecoins to cryptocurrencies.

Also read: Why FTX's Collapse Is The Crypto Equivalent Of The 2008 Lehman Brothers Crisis

Asked about regulatory disclosures regarding the risks of these stablecoins, Zhao said Binance does not issue BUSD but Paxos does, and based on his understanding, “Paxos is doing a good job.”

What If BUSD Is Outlawed?

When asked about the risk of regulators outlawing stablecoins like BUSD, Zhao said, “Your question is very hypothetical. You can ask me the same question about USDC. What happens if USDC gets banned tomorrow? We don’t know. It will definitely be negative for the industry. Crypto will probably go up because people will be buying crypto in a hurry because they have to get rid of the USDC, but I cannot answer hypothetical situations on what will happen tomorrow. The Moon could disappear tomorrow. What are you gonna do?”

Where It All Started

Asked to explain his tweet where he announced the selling of FTT FTT/USD the native tokens of now bankrupt crypto exchange FTX, Zhao said he had not seen the finances of FTX and did not know how user funds were being used.

However, Zhao continued, he had “hunches” in the back of his head regarding FTX’s relative size, trading volumes, fees, and at the same time, the vast spending of the Sam Bankman-Fried-led crypto exchange.

“The Miami stadium (FTX Arena), the acquisitions, investments in crypto projects. I was always curious about where they were getting all this money from. We also knew how much money they had raised. They just couldn’t have so much cash,” he said.

Zhao further said the only other possible explanation was that Alameda was making tens of billions of dollars, but if it did so, they were ripping off users to the tune of billions of dollars, however, based on their wallet addresses, even FTX’s users did not have that much money.

“So, I could do some mental mathematics - broad strokes - and it doesn’t really add up. But I did not look at their books. They could have been so much smarter, so much [more] magical doing something that we were too dumb to figure out. There could also be a backroom deal where they took a loan from VCs, but I couldn’t know for sure,” he said.

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