Binance hits back after criticism: “our stablecoins are safe”

Major Binance hits back at Bloomberg, which claimed in a recent article that the exchange platform’s BUSD stablecoin is not fully backed by real dollars. In a blog post of January 10, Binance tries to suppress the negative rumors, but it is not a 100 percent convincing story.

Problems lie in the past

According to Binance, the problems that sometimes played a role in the coverage of the stablecoin are definitely in the past. It involves the following complex situation: The Binance peg BUSD should normally represent a constant value of 1 US dollar, due to the backing of BUSD, which is another stablecoin.

BUSD is a stablecoin branded by Binance, but issued by a separate company, Paxos Trust. Binance says that the word “peg” refers to the amount of BUSD tied up as collateral to support the value of its own token. That sometimes went wrong in the past, the stock exchange admits, but that is no longer the case at the moment.

“The process of maintaining the link requires multiple teams and has not always gone smoothly, which has caused delays in the past,” said a Binance representative. to Bloomberg News. “The process has recently improved enormously, we check for discrepancies more often and there is always a 1:1 coverage,” the representative continues.

Binance USD is fully covered

Furthermore, the exchange platform indicates that the Binance USD (BUSD) is fully backed by US dollars or cash-like financial instruments. Binance peg BUSD peg is also fully covered for BUSD. “Despite the variance in the data, users have not run into problems at any point,” said Binance.

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Lawmakers and the media have focused more on stablecoins since May 2022, after the Terra protocol algorithmic stablecoin imploded. Billions of dollars in value went up in smoke. Enough reason for both the media and the government to shift the focus to stablecoins, which in some cases are a lot less stable than the name suggests.

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