Binance CEO: FTX collapse is a setback, but crypto is ‘actually better in the long run’

Binance CEO Changpeng Zhao said Thursday that while the sudden collapse of rival cryptocurrency exchange FTX represents a setback for the industry, the asset class will eventually emerge better off over time.

“This incident will set us back a bit, but then the industry will become healthier,” Zhao, known in the crypto community as CZ, told CNBC. “So it’s actually better in the long run.”

“I think fundamentally, though, if we look at the industry 5 years, 10 years from now, the industry will be much, much bigger,” the head of Binance (BNB-USD) added.

Taking aim at FTX founder Sam Bankman-Fried, who has come under fire for his management of the crypto exchange headed into its bankruptcy, Zhao referred to his former rival as a “bad player,” although he also acknowledged that the overall structure of the crypto market played a part in the recent meltdown.

“We shouldn’t blame this problem on any single person, other than Sam, but everybody in the industry [does] share a bit of the responsibility,” he said.

The latest criticism of Bankman-Fried has come from his successor as FTX CEO. John Ray III, who has been tasked with steering the company through its bankruptcy, said in a court filing, “Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.”

On the subject of regulation, Zhao contended that his firm has always “embraced” government rules for the crypto industry in the U.S. However, he suggested that additional oversight wouldn’t necessarily have prevented the FTX crisis.

“I think regulations could minimize some of the problems, but when a person lies, when there’s a bad player that just wants to do bad things, regulations [don’t] prevent it,” he said.

The collapse of FTX sent shockwaves through the crypto industry. In the wake of the news, Bitcoin (BTC-USD) plunged to a 52-week low below $15.55K. The crypto has recovered a bit lately, although it remains below $16.5K, down more than 70% over the past 12 months.

Ethereum (ETH-USD) dipped below $900 in the wake of the FTX meltdown, although it has rebounded to within sight of $1.2K lately. The crypto is down about 9% for the past month and lower by about 72% for the past year.

Names like Cardano (ADA-USD) and Solana (SOL-USD) have also suffered in the wake of the FTX bankruptcy, adding to weakness seen throughout 2022.

For more on the possible future of Bitcoin (BTC-USD), Seeking Alpha contributor BOOX Research agrees with CZ’s general position, saying that “the collapse of FTX is ultimately bullish for Bitcoin.”

However, fellow SA contributor Paulo Santos takes a more bearish view, arguing that “more regulation can’t cure the problem.”