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Crypto Exchanges Lie That Your Funds Are Safe: Nouriel Roubini

Tue, 11/22/2022 - 12:50
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Yuri Molchan
Prominent economist "Dr. Doom" slams crypto exchanges and "proof-of-reserves" suggested by CZ
Crypto Exchanges Lie That Your Funds Are Safe: Nouriel Roubini
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Renowned economist Nouriel Roubini, famous for predicting the collapse of the mortgage market in 2008-2009 and called "Dr. Doom" for that, remains a vocal crypto hater.

This time, he has taken to Twitter to take a dig at crypto exchanges and the concept of "proof of reserves" offered by CZ of Binance.

"Customer assets not safe in bankruptcy," here's why

Roubini has taken a jab at crypto exchanges and the "proof-of-reserves" concept recently offered by CZ of Binance in response to FTX going bankrupt, along with its founder, former crypto billionaire Sam Bankman-Fried.

CZ called on crypto exchanges to provide proof of reserves to show the crypto community that exchanges are indeed keeping customers' crypto safe. Today, CZ announced that the subsidiary of Binance, CoinMarketCap, has launched a new dashboard feature that the shows PoR of various crypto exchanges.

This feature shows that the funds held by Binance surpass $78.7 billion worth of various cryptocurrencies.

Still, "Dr. Doom" Roubini believes that PoR is merely a gimmick employed by exchanges and crypto lenders to pretend that they are keeping their clients' money safe. In reality, Roubini insists, since funds are in the custody of a crypto exchange, this means the money is on its balance sheet. This means that if a platform goes insolvent, like FTX did, the funds are not safe.

Finally, he stated that exchanges are, in fact, pretty much banks in this respect.

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Bitcoin drops hard as lack of trust in exchanges surges

At the moment, the leading digital currency, Bitcoin, has plunged on, reaching the $15,720 zone — a low last seen two years ago. Santiment analytics agency explains this massive price fall that started after the FTX scandal and collapsed with the growing lack of trust in crypto exchanges.

The fall of the FTX giant has generated a great amount of FUD and now Bitcoin and Ethereum are seeing massive withdrawals from centralized exchanges into self-custody.

Crypto influencer David Gokhshtein, who founded Gokhshtein Media, has also commented on this issue. In one of his recent tweets, he stated that anyone who continues to keep their crypto on exchanges, CEXes or DEXes, is "a complete vegetable."

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About the author

Yuri is a crypto journalist interested in technology and technical innovations. He has been in crypto since 2017. Believes that blockchain and cryptocurrencies have a potential to transform the world in the future in many of its aspects. ‘Hodls’ major cryptocurrencies and has written for multiple crypto media outlets. 

His articles have been quoted by such crypto influencers as Tyler Winklevoss, John McAfee, CZ Binance, Max Keiser, etc.

Currently Yuri is a news writer at U.Today and can be contacted at