Binance founder Changpeng Zhao, better known as CZ, said acquisitions of smaller centralized exchanges come with a different risk profile than other types of deals. Responding to a question about why he does not buy small CEXs, CZ said the main issue is what happens after a takeover if the acquired platform suffers a hack. In that situation, it can be difficult to tell whether the breach was caused by a backdoor left by the previous team or by a newly introduced problem after the acquisition.
He said that uncertainty raises both security and compliance risk for the buyer. CZ did not rule out exchange acquisitions altogether, but said deals involving CEX platforms require more complicated due diligence and risk-control procedures. The remarks were reported by ChainCatcher in a 7x24 news flash.
According to ChainCatcher, Binance founder Changpeng Zhao, or CZ, said buying a centralized exchange is different from acquiring other types of businesses.
Answering a question about why he does not acquire smaller CEXs, CZ said that if a hack happens after the acquisition, it is hard to determine whether the issue came from a backdoor left by the previous team or from a new problem. That makes the security and compliance risks higher.
CZ added that acquiring a CEX is still possible, but the due diligence and risk-control process is more complicated.
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