Exchanges Outperform Self-Custody in Bitcoin Losses, CZ Argues
Binance founder Changpeng Zhao (CZ) sparked controversy in the crypto community by arguing that storing coins on an exchange is safer than self-custody. He cited data from analyst Willy Woo showing that approximately 1.57 million BTC have been lost through self-custody, compared to roughly 1.51 million BTC lost on exchanges.
The data, which was published by Woo on August 3, suggests that individual mistakes have quietly surpassed the total damage from every exchange breach in Bitcoin's history. CZ pointed out that this is not a zero-sum game, and that both methods of custody have their own risks and benefits.
CZ also highlighted Binance's Secure Asset Fund for Users (SAFU), which currently holds approximately $1 billion in reserves to protect users' funds in case of any losses or breaches. He emphasized the importance of a balanced approach to custody, recognizing that different methods cater to different user needs.
Investors with significant holdings should consider the distinction between correlated and isolated risk events when deciding where their coins are stored. While CZ's argument may challenge prevailing views on self-custody, it also acknowledges the complexity of the issue and encourages a more nuanced approach to custody.