Changpeng “CZ” Zhao believes that “99% of people” will be better off keeping their funds on a centralized exchange than putting them on a cold wallet. His bold statement comes amid the increased FUD surrounding Binance, as some call into question the financial health of the biggest crypto exchange and legitimacy of its recent proof-of-reserves report.
“Most people are not able to back up their security keys; they will lose the device,” CZ said, quoted by Decrypt. “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].”
“I always try to educate people so they understand there are risks,” he added. “Holding your own crypto in your wallet is not risk-free; I actually think more people lose money holding their own — lose more crypto when they’re holding on their own than on a centralized exchange.”
However, just a month ago, Binance CEO seemed to be a vocal proponent of self-custody, urging his 8 million followers to opt for cold wallets in the wake of FTX implosion.
“Self custody is a fundamental human right. You are free to do it at any time. Just make sure you do it right. Recommend start with small amounts to learn the tech/tools first. Mistakes here can be very costly. Stay #SAFU,” he wrote in November 13 tweet.