Binance said it will put the interest of its users first before its shareholders in the event that the exchange goes bankrupt.
Following the recent debate over Coinbase’s user refund policy in the event of a bankruptcy, Binance, the world’s largest cryptocurrency exchange by trade volume, has disclosed that it will always put its users’ interests first over shareholders’.
The CEO and founder of Binance, Changpeng Zhao popularly referred to as CZ noted in a now deleted Ask Me Anything (AMA) session that if the exchange ever goes bankrupt, it would first of all refund its users before its shareholders.
“Funds would be refunded to users first, before any shareholders, ”CZ was quoted as saying in the AMA session.
Coinbase Under Fire Over Its Disclosure
This comes less than two weeks after the San Francisco-based cryptocurrency Coinbase declared in its Q1 2022 financial report that should it go bankrupt, it would hold on to customers’ funds as part of its property while referring to these users as “unsecured creditors.”
The caveat prompted many cryptocurrency experts to call on Coinbase users to remove their funds from the exchange as they may lose their funds to the trading platform if it ever goes bankrupt.
CZ’s Concerns for Retail Investors
CZ has always been concerned about the well-being of retail users over major investors. Following the recent collapse of the TerraForm Labs ecosystem tokens, CZ urged the Terra team to make small investors whole before taking care of its large investors.
Binance’s CEO made this suggestion despite seeing its $1.6 billion worth of LUNA holdings turn to $3,000, following the crash of the crypto’s price.
“To lead by example on PROTECTING USERS, Binance will let this go and ask the Terra project team to compensate the retail users first, Binance last, if ever,” CZ said in a tweet last week.
Aside from the fact that Binance will prioritize its users before shareholders in the event that the exchange goes bankrupt, CZ also talked about other issues, including Terra.
It is no longer news that CZ is furious with the Terra team. He has publicly condemned how the firm handled the de-peg of its stable coin, resulting in a massive fall in crypto prices.
According to the Binance CEO, investors would not have suffered major losses if only Terra deployed its reserve earlier than it did.