Nothing is certain and proven at this point, but this is somewhat similar to FTX’s practices. Probably on a smaller scale, but the fact that customers’ funds are in the same wallet as the reserves of the exchange platform is a bad thing. Partly for this reason, concerns arose about the exchange platform, which prompted many people to remove their assets from the platform, resulting in a significant drop in the market cap.
Binance’s BUSD stablecoin
A striking fact about Binance’s BUSD stablecoin is that the exchange platform does not issue it itself. It is a stablecoin from the New York-based Paxos Trust. They then issued the BUSD stablecoin under the Binance brand. The stablecoin itself is backed by cash and US government bonds. Traders on the platform use the stablecoin as a way to step out of the market and wait on the sidelines for a better time to buy back in.
However, earlier this month, ChainArgos discovered that Binance cheated with the reserves of the stablecoin. Binance acknowledged that things “accidentally” went wrong and that things are now being fixed. It is to be hoped that, as Binance says, it is a storm in a teacup, because the collapse of Binance is something the industry cannot cope with right now.
