IMF adviser Nouriel Roubini, who predicted the collapse of the mortgage market in 2008-2009, says central Bitcoin exchanges are not safe.
Nouriel Roubini criticizes the “proof of reserve” practice proposed by CZ
A well-known economist, Dr. Nouriel Roubini, nicknamed Doom, finds the “proof of reserve” system that Binance CEO CZ started and has become a necessity unnecessary. The crisis seer had taken sides against cryptocurrencies since its inception. This time he criticized the idea of “proof of reserve” put forward by CZ and Binance on Twitter. cryptocoin.com As you follow, exchanges that want to regain investor confidence after the bankruptcy of FTX have applied to this practice, which should shorten the PoR. Investment giant Grayscale, on the other hand, completely opposes it.
6) Coinbase frequently performs on-chain validation. Due to security concerns, we do not make such on-chain wallet information and confirmation information publicly available through a cryptographic Proof-of-Reserve, or other advanced cryptographic accounting procedure.
— Grayscale (@Grayscale) November 18, 2022
“Investors’ funds are not safe”
After the events around FTX, Binance CEO CZ recommended that all central exchanges share their proof of reserve. CZ wants centralized platforms to demonstrate that they truly protect their investors. Today, CZ announced that CoinMarketCap, a subsidiary of Binance, has launched a new dashboard feature that displays the reserves of various exchanges. This feature shows that Binance’s reserves total more than $78.7 billion in various cryptocurrencies. Nouriel Roubini says it’s all a “game”…
.@CoinMarketCap released a new exchange reserve dashboard feature. https://t.co/JRijTsgE6B
— CZ 🔶 Binance (@cz_binance) November 22, 2022
Roubini said that PoR is just a game used to look like they are protecting customers’ money. According to Roubini, the fact that the money is in the custody of a cryptocurrency exchange means that it is on its balance sheet. This means that money is not safe when a stock market crashes, as with FTX. Finally, Roubini said that exchanges are actually very similar to banks in this regard. He wrote on Twitter today:
Proof of Reserves (PoR) is a trick used by crypto exchanges/lending platforms to pretend their clients’ funds are safe. These funds are on the balance sheet because they are stock market custody, and clients’ assets are not safe in the event of bankruptcy. These are banks NOT stock markets!
Proof of Reserves (PoR) is the gimmick used by crypto exchanges/lending platforms to pretend that their customers funds are safe. As these assets are in the exchange custody they are on its balance sheet & customers assets aren’t safe in bankruptcy. These are banks NOT exchanges!
— Nouriel Roubini (@Nouriel) November 22, 2022
Bitcoin continues to melt amid growing distrust
The leading crypto has reached a two-year low of $15,720 today. On-chain analytics firm Santiment attributes the decline to growing distrust of exchanges following FTX’s bankruptcy. After the crisis, large amounts of Bitcoin and Ethereum were withdrawn from central exchanges to cold wallets. And this is currently happening as a result of FUD created by the collapse of the FTX giant. US politician David Gokhshtein also shared his thoughts on this issue. He recently said in one of his tweets that anyone holding on exchanges, CEXs or DEXs is a “full vote”:
Anyone who still has their #crypto assets on any exchanges is a complete vegetable.
— David Gokhshtein (@davidgokhshtein) November 21, 2022
Meanwhile, BTC price is rebounding amid rising whale sell warnings. After falling as low as $15,480 on November 22, it climbed back to $16,200.
