Prominent economist “Dr. Doom” slams crypto exchanges and “proof-of-reserves” suggested by CZ
Renowned economist Nouriel Roubini, famous for predicting the collapse of the mortgage market in 2008-2009 and called “Dr. Doom” for that, remains a vocal crypto hater.
This time, he has taken to Twitter to take a dig at crypto exchanges and the concept of “proof of reserves” offered by CZ of Binance.
“Customer assets not safe in bankruptcy,” here’s why
Roubini has taken a jab at crypto exchanges and the “proof-of-reserves” concept recently offered by CZ of Binance in response to FTX going bankrupt, along with its founder, former crypto billionaire Sam Bankman-Fried.
CZ called on crypto exchanges to provide proof of reserves to show the crypto community that exchanges are indeed keeping customers’ crypto safe. Today, CZ announced that the subsidiary of Binance, CoinMarketCap, has launched a new dashboard feature that the shows PoR of various crypto exchanges.
This feature shows that the funds held by Binance surpass $78.7 billion worth of various cryptocurrencies.
.@CoinMarketCap released a new exchange reserve dashboard feature. https://t.co/JRijTsgE6B
— CZ 🔶 Binance (@cz_binance) November 22, 2022
Still, “Dr. Doom” Roubini believes that PoR is merely a gimmick employed by exchanges and crypto lenders to pretend that they are keeping their clients’ money safe. In reality, Roubini insists, since funds are in the custody of a crypto exchange, this means the money is on its balance sheet. This means that if a platform goes insolvent, like FTX did, the funds are not safe.
Finally, he stated that exchanges are, in fact, pretty much banks in this respect.
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 drops hard as lack of trust in exchanges surges
At the moment, the leading digital currency, Bitcoin, has plunged on, reaching the $15,720 zone — a low last seen two years ago. Santiment analytics agency explains this massive price fall that started after the FTX scandal and collapsed with the growing lack of trust in crypto exchanges.
The fall of the FTX giant has generated a great amount of FUD and now Bitcoin and Ethereum are seeing massive withdrawals from centralized exchanges into self-custody.
Crypto influencer David Gokhshtein, who founded Gokhshtein Media, has also commented on this issue. In one of his recent tweets, he stated that anyone who continues to keep their crypto on exchanges, CEXes or DEXes, is “a complete vegetable.”
Anyone who still has their #crypto assets on any exchanges is a complete vegetable.
— David Gokhshtein (@davidgokhshtein) November 21, 2022