Amid the Squid gaming token scandal, Binance CEO Changpeng Zhao warned of the risks of DeFi and spoke about his attitude towards decentralizing the crypto industry.
The head of Binance, Changpeng Zhao, said that if a cryptocurrency project offers 100% profit, this should at least alert the investor. He must understand that investing money in such a project is fraught with great risk, sometimes so great that the boundaries between investing and gambling are blurred.
According to the founder of Binance, newbies should
choose Centralized regulated platforms for gaining trading experience. While investing in cryptocurrencies on centralized exchanges still carries risks, they have much more user protection mechanisms than DeFi. In addition, there are more opportunities for refunds on centralized exchanges in the event of error or fraud. Large sites with a positive reputation are designed to be accessible and easy to use.
Changpeng Zhao acknowledges that DeFi provides many opportunities and strategies for qualified users. He believes that the future of the cryptocurrency industry lies in decentralization. With the benefits of DeFi, anyone can access cryptocurrency products and services without relying on intermediaries.
The Binance founder warns that despite the convenience of DeFi, the user has to manage their private keys on their own. If he loses them, he will lose access to his cryptocurrencies. According to Zhao, DeFi does not have a verification or restriction process that protects the user from interacting with suspicious projects. In addition, smart contracts that facilitate transactions can have vulnerabilities that the user is not aware of.
Binance announced last week that it is investigating the Squid token scam. The DeFi sector does have its own problems, but Binance has just as many. In October, a European investor filed a complaint against the Binance cryptocurrency exchange with the International Chamber of Commerce (ICC). He is demanding damages in the amount of more than $ 140 million. Four days earlier, on Binance.US, the bitcoin rate collapsed to $ 8,200 due to an error in the trading algorithm.