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We don’t have loans; we don’t owe anyone – CZ



In the recent events of exchanges losing users’ trust due to crashes, one question Binance users have been asking is: how safe is the largest exchange in the world? Explaining the status of Binance to an audience at an AMA, CZ said, “We don’t have loans. We don’t have debts.” 

He revealed that Binance, being a simple business, has never taken loans from anyone and has not taken VC investments or returned VC funds as swaps or loans. The CEO added that users on Binance are not given loans from the exchange in any form. 

What we do is provide margins where the saving products by users are lent to margin traders who cannot withdraw the money from the Binance exchange, CZ pointed out. He told the audience that Binance manages all the risk in this process by ensuring that traders are liquidated when they are out of margin.

Binance makes money through trading fees

CZ further explained to the listeners that Binance makes money from charges paid by users who trade on the platform. “We are not trying to be a hedge fund. We don’t do futures trading ourselves.”

In addition to the services Binance offer, the Binance Chief added that Binance does a bit of DeFi staking by interacting with smart contract protocol and market maker with third parties who only offer liquidity. He also revealed that he’s an investor and shareholder of a non-profit market maker in the crypto industry. The huge liquidity pull of Binance makes other smaller exchanges depend on it also.

Read also;

Vitalik to create a Proof of Reserve protocol

Self-custody will make DeFi better – CZ

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