Binance CEO Changpeng CZ Zhao has waded into the SVB conversation that has been ongoing for some days. The Binance boss has faulted the role of traditional banks for the heightened risk in dealing with stablecoins. He mentioned that their activities have caused losses, unstable markets, and some other negative perceptions that the crypto market has gotten over the last few months.
CZ faults SVB for its role in the USDC mishap
In his first example, CZ cited the case of the fall of the Terra ecosystem. He mentioned that the drastic fall of the ecosystem ushered in the bear market of 2022. Asides from traders losing a massive amount of funds in the Terra mishap, CZ said it caused investors to panic and sell other assets, causing more dips. He also mentioned that the mishap brought more regulatory attention to the already budding crypto sector.
CZ noted that traditional banks have opened up stablecoins that share a peg with the dollar to the uncertain risk of depegging. The current issue with the USDC de-pegging was down to Silicon Valley Bank. The financial institution failed to process a transaction of about $3 billion that was activated by Circle. The information entered the crypto space, which forced traders to sell off their USDC, which in turn caused the issues. With SVB’s part in the issue, CZ has chosen to blame financial institutions.
Traders lose funds to USDC collapse
In another thread, CZ highlighted how the Terra stablecoin could have been one of the best. This was after a Twitter user suggested that the Binance boss looks into developing a crypto-backed stablecoin. CZ remarked that Do Kwon had a perfect idea, but his execution of the project was what caused the issue. In addition, CZ highlighted that without crypto, fiat currencies has been an issue even when they stand alone.
While Kwon has been the target of numerous agencies and lawsuits worldwide, he has stayed in hiding while stressing a civil dialogue with any authority that offers. After the SVB news broke out, there was a consensus among traders of a likely event that happened with Terra occurring again, so there were many panic trades. One unlucky user lost about $2 million in the process, getting only 0.5 USDT.