Binance’s CZ Disapproves Crypto Self-Custody for All

Far from what Ray Youssef, Chief Executive Officer (CEO) of Paxful believes, the head of Binance exchange Changpeng Zhao popularly known as CZ argues that keeping digital assets in a cold wallet will be riskier than holding them in centralized exchanges. CZ noted a need to make this information public after massive withdrawals of stablecoins were noticed on the Binance exchange.

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Zhao speculates that almost 100% of all users pulling out their funds to hold them in self-custody, will lose them one way or the other.

He cited the fact that security keys are often not either stored securely, backed up, or properly encrypted. Noteworthy, Changpeng Zhao did not totally rule out self-custody, as he says those who are technically able to do so can go ahead but not without being aware of the consequences.

Accordingly, CZ mentioned that crypto cold wallet storage is no different from holding them in exchange as the former is not risk-free.

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Before now, the Binance chief was a crypto self-custody evangelist referring to the practice as a “fundamental human right.”

Although he has always held the opinion that self-custody should be done the right way. This made him publish a ‘CZ Tips’ article two years ago to enlighten users on the right self-custody strategy. TrustWallet was one of the platforms which Zhao endorsed in the wake of the FTX implosion.

Fast forward to this day, it seems like Zhao has made a U-turn on his crypto self-custody stance. “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,” CZ explained.

“Worse still, if a person was to pass away without leaving a way to give access to their next of kin, their digital assets would be forever lost. But, with our standard operating procedure, this doesn’t have to be a problem,” he added.

Paxful CEO Youssef is on the other side of the road holding firm to his stance even at the detriment of his exchange. Youssef is showing full support for crypto self-custody.

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