Crypto CEO Warns Of 2008-Style Crisis For Industry

The reeling crypto industry faces a 2008-style crisis that will lead to a much-needed regulatory crackdown, crypto CEO Changpeng Zhao warned, Matt Egan reported for CNN Business.

Photo Insert: The Binance boss, known as CZ, was speaking amidst the stunning implosion of rival FTX, which filed for bankruptcy just hours later.

“It’s devastating for the industry. A lot of consumer confidence is shaken. We’ve been set back a few years,” Zhao, the CEO of cryptocurrency exchange Binance, said during a conference in Indonesia.

The Binance boss, known as CZ, was speaking amidst the stunning implosion of rival FTX, which filed for bankruptcy just hours later.

“We’ve just seen another very big player going down,” said Zhao, who noted this collapse follows the downfall of Celsius, Voyager, Three Arrows Capital and other crypto firms.

Zhao was a key player in the downfall of FTX. Binance reached a tentative rescue deal with FTX earlier this week, but that transaction almost immediately fell apart, paving the way for Friday’s bankruptcy filing and the resignation of FTX founder Sam Bankman-Fried.

The moderator noted the crypto turmoil feels much like the 2008 global financial crisis, which brought down Bear Stearns, Lehman Brothers and other leading Wall Street players. “That’s probably an accurate analogy,” Zhao said.

He urged regulators to look beyond just anti-money laundering and know-your-customer (KYC) rules and focus instead on the operations, business models and reserves of exchanges like FTX.

“Regulators, rightfully, will scrutinize this industry much, much harder, which is probably a good thing, to be honest,” Zhao said.

“Short-term, it’s very painful for retail investors…We feel that pain. But longer-term, this is another wakeup call to say, ‘Look, we are in a new industry. There are a lot of risks and we need to learn how to deal with these risks.”

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