Nouriel Roubini doesn’t like cryptocurrency exchanges. And he is flatly unimpressed with the “proof of reserves” idea that Binance and other crypto players are touting in the wake of FTX’s epic collapse.
Binance will be open Friday morning announced the releaseIt will begin with Bitcoin as its proof-of-reserve system. It wrote on its site, “Following our recent announcement outlining our commitment to transparency, Binance is releasing its Proof of Reserves (PoR) System, which is the next step in our effort to provide transparency on user funds. The launch of this feature will start initially with BTC, with other tokens and networks being added in the next couple of weeks.”
Roubini was also present that day. tweeted, “Crypto is corrupt gambling where the house always & systematically front runs the retail suckers that get rekt. 100+ million suckers rekt globally by a bunch of crypto gangsters.”
He spoke earlier this week. tweeted, “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!”
He also retweeted posts by others, such as one on Saturday from Bitfinex’ed reading, “Exchanges are trying to do so-called proof of reserves to show that they have customers funds. Do not forget, proof of reserves is meaningless. To show crypto, exchanges borrow from each other. That’s why you see ‘accidental’ transfers of hundreds of millions of dollars.”
‘Totally corrupt’ cryptocurrency industry
Roubini also called the cryptocurrency industry “totally corrupt” while speaking atAbu Dhabi Finance Week, Nov. 16 He urged Emiratis to expel Binance exchange founder Changpeng “CZ” Zhao—a resident of the United Arab Emirates who has a license to operate in the country—likening him to disgraced FTX founder Sam Bankman-Fried.
“He’s banned in the U.K., he’s under investigation by the U.S. justice department for money laundering…and he’s here on this stage and has residence in this country,” Roubini said. “He’s a walking time bomb, he should be kicked out of the country.”
CZ suggested earlier this month that proof of reserves systems could reform the crypto industry and restore confidence among investors, offering a new level of transparency that would prevent the kind of sketchy accounting that contributed to FTX’s sudden implosion.
“That is absolutely going to be where the focus is for the next little while, which is right,” he said. “We have learned from our mistakes.”
Even before the FTX collapse, Binance was the world’s largest crypto exchange. Although its position is now stronger, the FTX collapse has cast a shadow across the entire cryptocurrency industry.
Roubini has earned a reputation as a Wall Street pessimist. He correctly predicted the financial crisis that would ensue from the 2007 collapse of the U.S. housing markets. Megathreats are the Age of Our TimeThe following outlines the 10 biggest economic problems facing the world:
He warned that the U.S. would be severely affected by a recession in 2023, which will also affect financial markets. “It’s not going to be a short and shallow recession,” he predicted. “It’s going to be severe, long, and ugly.”
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