If we use the information from Forbes To be believed, Binance, the largest crypto exchange in the world, sent $ 1.8 billion in capital to hedge funds last year. The terrifying thing is that $1.8 billion was meant to cover its users’ stablecoins. According to the article, Binance sent this collateral to hedge funds like Alameda Research and Cumberland/DRW without informing its users.
Did Binance Lie About Stablecoin Coverage?
It appears that Binance lied at times about its stablecoin coverage. According to blockchain data from August 17 through early December, $1 billion worth of B-peg USDC tokens had no collateral. A B-peg USDC token is a digital replica of the USD Coin (USDC) pegged to the US dollar.
If you ask Patrick Hillman, Binance’s chief strategist, there is absolutely nothing to worry about. Sending the funds to different wallets is, according to him, a normal course of events. “There was no mixing of funds because there are wallets and there is a ledger,” Hillman told Forbes.
Binance CEO calls it FUD
Changpeng ‘CZ’ Zhao, CEO of Binance, responds to Forbes’ piece via Twitter. He says that the exchange never invested or otherwise processed customer funds without the consent of the users. He also accuses the Forbes authors of apparently not knowing how blockchain technology or crypto exchanges work.
I am reluctantly spending time on FUD again (4). Forbes wrote another FUD article with lots of accusatory questions, with negative spins, intentionally misconstruing facts. They referred to some old blockchain transactions that our clients have done. 1/9
— CZ 🔶 Binance (@cz_binance) February 28, 2023
“They don’t seem to understand the basics of how an exchange works. Our users are free to withdraw their assets at any time. Our users also have to deposit to Binance first in order to withdraw, which are also easily traceable on the blockchain. The article conveniently ignores the deposit transactions.”
Said Zhao. The article compares Binance to the collapsed FTX, but CZ says Binance is different. CZ also says that he is disappointed that his Chinese background is being mentioned again.