CZ Binance: 99% of People Practicing Self-Custody Will Lose Their Money

The November collapse of the once-thriving FTX centralized crypto exchange founded by Sam Bankman-Fried has brought about an increase in the preaching of asset self-custody in the crypto space.

This has resulted in the widespread use of the popular maxim “not your keys, not your coins” across the crypto community. In consequence, more users have been spurred to offload their crypto assets from centralized exchanges to preferred non-custodial wallets and cold storage.

Recently, Times Tabloid reported that billions of XRP tokens were sent out of Bittrex to different non-exchange wallet addresses. Likewise, billions of funds were withdrawn from the Binance exchange a few days ago.

While this action instigated a mild FUD, the Binance CEO Changpeng Zhao cleared the air stating that it was business as usual, adding that the recent withdrawal constituted less than 2% of the exchange’s holdings.

In a Wednesday Twitter Space, the Binance Chief shared his sentiments on the recent comments and actions toward assets storage on centralized exchanges. CZ noted that users are more liable to lose their assets by holding them in cold wallets instead of exchanges.

While speaking during the Twitter Space, CZ told, “I always try to educate people so they understand there are risks. Holding your own crypto in your wallet is not risk-free; I actually think more people lose money holding on their own; lose more crypto when they’re holding on their own other than on a centralized exchange.”

According to him, self-custody, which entails holding your crypto in a cold wallet or hardware storage and not with a company, is not risk-free. However, he mentioned that those who are technically capable of being their bank should do so.

In his words, “for most people, for 99% of people today, asking them to hold crypto on their own, they will end up losing it. Most people are not able to back up their security keys; they will lose the device. They will not have the proper encryption for their backup; they will write it on a piece of paper, someone else will see it, and they will steal those funds.”

“And also today, very fundamentally, if a person passes away, they don’t have a way to give to their next of kin. Whereas we have a standard operating procedure [for that],” he added.

Ndianabasi Tom

Ndianabasi Tom joined the crypto and blockchain industry in late 2018. He is an all-rounded crypto journalist and content writer. At TimesTabloid, he covers the industry's latest news, developments, and other educational content. He is a graduate of Petroleum Engineering.