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A statement made by the CEO of the biggest cryptocurrency exchange on the market puzzled hundreds of investors in the space. Changpeng Zhao stated that those who move their digital assets into self-custody will still lose them. The statement was made during a Twitter spaces talk, amid a massive funds outflow from Binance.
The main claim of users was a conflict of interest that CZ has in speaking about this topic. From a technical standpoint, funds in self-custody are significantly safer than funds on cryptocurrency exchanges, considering the frequency of attacks on trading platforms, the dishonesty of the exchange's lead and mismanagement quite often lead to a loss of users' funds.
Losing money in self-custody
The only scenario in which users might lose their coins is an unintentional loss of keys, usage of the wrong recipient address when transferring funds and other cases of poor funds management. However, if a wallet owner properly stores his or her private keys, double checks an address when transacting funds and takes all of the essential steps, a loss of funds is almost impossible.
Self-custody just got even better with @TrustWallet. https://t.co/qMxT1zRSnF
— CZ 🔶 Binance (@cz_binance) December 14, 2022
Obviously, the CEO of the biggest cryptocurrency exchange on the market knows the aforementioned things, which means that the phrase has been taken out of context. What Zhao really meant is that holding assets in your own wallet is not risk-free and users will still lose their funds, even without the third-party due to an extremely low level of education and a lack of user-friendly interfaces that would make storing crypto as easy as storing funds on centralized exchanges.
However, not many community members cared to listen to the full recording and jumped to conclusions instead, even including some influencers. At the same time, the number CZ brought up while delivering his speech is unlikely to be close to reality.
Alex Dovbnya
Valeria Blokhina
