Has Binance embezzled customer funds?
2 min readBinance, the world’s largest crypto exchange, is said to have embezzled $1.8 billion in customer funds. that writes forbes in a recent article. The business magazine is thus assuming that the trading venue is “maneuvering similarly to FTX”. When the crypto exchange FTX imploded in November last year, competitor Binance presented itself as a white knight who shook hands with the ailing industry. The trading center is committed to an initiative to disclose its own reserves for more transparency, launches a billion-dollar recovery fund and provides financial support to struggling crypto companies. Binance repeatedly emphasizes that its own customer assets are fully covered.
A Forbes report now casts doubt on that. The business magazine analyzed on-chain data between August and December 2022. During this period, Binance is said to have secretly sent a total of $1.8 billion to various crypto hedge funds. Actually nothing spectacular if it weren’t for funds that the exchange would actually have to store to secure customer assets, in this case stablecoins.
Among the recipients are: Tron, Amber Group and Alameda Research – Alameda Research, which also saved Sam Bankman-Frieds FTX from bankruptcy with generous cash injections, procured from customer funds.
Binance is said to have sent a good one billion US dollars to the crypto hedge fund Cumberland/DRW. The latter is said to have helped Binance convert a digital replica of the Circle stablecoin USDC into its own currency BUSD.
Binance boss calls allegations ‘FUD’
The allegations are dismissed by Binance CEO Changpeng “CZ” Zhao on Twitter return. The article “deliberately” misinterprets the facts. The data used is old blockchain transactions that customers have carried out. Zhao emphasized that users can withdraw their funds on Binance at any time.
A company spokesman told Coindesk that Binance “never invested or otherwise used customer assets without their consent.” Client funds would be held in segregated accounts.
In the past, there have always been skirmishes between Binance and Forbes. In 2020, the crypto exchange sued the magazine for alleged “defamation”, but subsequently withdrew the lawsuit. Instead, in February last year, Forbes bought $200 million – the latest reporting proves at least one thing: Forbes’ journalistic independence.
The pressure on the world’s largest crypto exchange has been increasing for months. Following an SEC crackdown on BUSD issuer Paxos, the stablecoin that Binance lent its name is losing all of its appeal. As a result, the use of the stablecoin collapsed. Coinbase recently announced that it would remove BUSD from its offering.
