Binance chief Changpeng Zhao and Microstrategy (NASDAQ: MSTR) executive chairman Michael Saylor each made pleas to crypto traders to self-custody their own digital assets as the implosion of the now-bankrupt exchange FTX continues to unravel.
Self-custody gives the traders the power of sole possession of your digital money or other digital assets because the user has control over the private key, as opposed to storing it in custodial wallets supervised by a third-party platform.
“Self custody is a fundamental human right. You are free to do it at any time,” Zhao tweeted, linking to an article he wrote two years ago on storing your own crypto. He added a warning that one must “make sure to do it right” and recommended to “start with small amounts.”
On the other hand, Saylor cautioned that if there are no self-custody mechanisms in place, “the custodians accumulate too much power and then they can abuse that power.”
Sponsored · Selkirk Copper Mines
“So self-custody is very valuable for this broad middle class, as it tends to create […] this power of checks and balances on every other actor in the system that causes them to be in continual competition to provide transparency and virtue,” he added, speaking at the recent Pacific Bitcoin conference.
He also said that if one can’t self-custody its coin, “there’s no way to establish a decentralized network.”
The comments come after many investors got their holdings locked in FTX as the exchange paused withdrawals amid its implosion due to liquidity crunches. The firm, then led by Sam Bankman-Fried, used customer deposits to invest in various positions through its sister hedge fund Alameda Research–causing an unideal situation of teetering insolvency.
Since the FTX crash early this month, the number of Bitcoin withdrawals on controlled exchanges has reached a 17-month high.
Self-custody platforms have seen a surge in inflows since the FTX implosion. Contract wallet Safe, formerly Gnosis Safe, has reported nearly $800 million in net inflows since last Tuesday while the token of the Binance-acquired self-custody wallet Trust Wallet rose 84% in the last 48 hours.
On the heels of the cryptoclasm caused by Bankman-Fried and FTX, Zhao announced Binance’s intentions to form a fund to assist ventures experiencing a liquidity issue. Tentatively called the “industry recovery fund,” the initiative aims to “help projects who are otherwise strong, but in a liquidity crisis.”
Information for this briefing was found via Coin Telegraph and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
