Changpeng Zhao (CZ) fed some FUD around Coinbase last night, before reversing his position after Brian Armstrong dismantled his pitch with supporting numbers. However, it turns out that Coinbase owned 10% of all BTC in circulation as of September 30, which raises questions about the centralization of the ecosystem.
CZ provokes Coinbase on these reserves
Rumors are rife after the explosion of the FTX empire, and few players are spared. Yesterday Changpeng Zhao (CZ), the CEO and Founder of Binance, probably spoke a bit too quickly by assertively questioning the solvency of Coinbase in a since-deleted tweet:
Figure 1 – Deleted tweet from CZ about Coinbase
While Grayscale disclosed that the 635,000 bitcoins of its various products were in custody of Coinbase, CZ drew a parallel by claiming that four months earlier the exchange had only 600,000 BTC. If such a finding were true, it would be serious for Coinbase, because this would mean that the platform would be completely insolvent.
However, the numbers given were wrongand Brian Armstrong claimed that his company actually owned 2 million BTC as of September 30, and that Coinbase’s status as a publicly traded company forced transparency:
If you see FUD out there – remember, our financials are public (we’re a public company) https://t.co/ayzN0zaqgT
—Brian Armstrong (@brian_armstrong) November 22, 2022
This echoes the ideas that we had been able to develop a fortnight ago concerning Coinbase, about a possible scenario at FTX. During this unstable period, the fear uncertainty and doubt (FUD) is particularly marked, and it can be easy to be convinced by risky reasoning from all sides.
After Brian Armstrong’s clarification, CZ announced that he deleted his tweet. However, we can question ourselves on the interest of sharing erroneous information hastily, in order tomy culpathen after checking the sources:
Brian Armstrong just told me the numbers in the articles are wrong. Deleted the previous tweet. Let’s work together to improve transparency in the industry.
— CZ 🔶 Binance (@cz_binance) November 22, 2022
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Significant centralization of the ecosystem
If the words of Brian Armstrong tend to reassure, they nevertheless raise other questions. Indeed, 2 million BTC is simply equivalent more than 10% of the circulating supply. If these assets are not really under the control of Coinbase, it is however necessary to ask whether it is healthy for a single player to centralize such a substantial part of the ecosystem.
The exchange is not an isolated case. Since yesterday, CoinMarketCap has made it possible to display the reserves of platforms that play this card of transparency, and the case of Binance is also particularly notable :
Figure 2 – Binance Reserves
According to the data collected, Binance stores nearly $68 billion. As of the writing of this article, the total capitalization of cryptocurrencies is valued at around $862 billion according to CoinGecko. This therefore means that Binance alone centralizes 7.8% of this capitalization.
If centralized platforms offer real comfort for easy access to the ecosystem, they should be considered. as a gateway rather than a place of storage. Otherwise, stories like Celsius, Voyager Digital or FTX will inevitably recur in the future.
👉 Also in the News – Coinbase Stock at All-Time Low as Market Falls
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Source: CoinMarketCap
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I timidly discovered the world of blockchain at the end of 2018 during my quest for financial freedom. Initially invested moderately, it was only two years later that I took the gamble of betting everything on the movement that was taking shape then. I then dedicate 2021 to training myself better to acquire more knowledge and seriousness. As I often like to say: I still have a billion things to learn. And what I do know, I want to share with you.
Vincent Mayor
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