Leading exchange Binance claims that the Forbes collateral report relates to its internal wallet management and is thus unfounded.
Binance has hit back at the Forbes report that claims it quietly transferred $1.8 billion in client-backing collateral. According to the Forbes report, the prominent crypto exchange moved the stablecoin-backing funds without informing its customers. The Forbes report stated that Binance moved a significant chunk of the transferred customer funds ($1.1 billion) to Cumberland, the crypto trading arm of DRW Holdings LLC, a diversified trading firm based in Chicago.
Binance’s chief strategy officer, Patrick Hillman, explained that transferring money between multiple wallets is customary. Hillman also dismissed any suspicions by pointing out the blockchain system’s transparency of wallets and ledgers. However, although he downplayed concern regarding mixing investors’ funds, Hillman avoided a question about a digital wallet external transfer. These transferred assets had been used to custody collateral for Binance coins pegged to other digital currencies.
Hillman’s comments suggest that despite revealed balances in Binance’s publicly viewable exchange wallets, the exchange has its own proprietary fund-tracking records. However, this scenario undermines Binance’s recent attempt to demonstrate solvency via proof-of-reserves exercises. Furthermore, managing two sets of books implies that Binance seeks customer and regulator trust while making verification of its solvency extremely difficult.
Nonetheless, a Binance spokesperson questioned the veracity of the Forbes collateral report, saying:
“The on-chain transactions identified relate to internal wallet management. While Binance has previously acknowledged that wallet management processes for Binance-pegged token collateral have not always been flawless, at no time was the collateralization of user assets affected. Processes for managing our collateral wallets have been fixed on a longer-term basis, and this is verifiable on-chain.”
Other Noteworthy Points from Forbes Binance Collateral Report
The Forbes report also stated that Binance put its customers’ assets to “other undisclosed uses” between August and early December. Furthermore, the tabloid revealed that the disbursed funds were in USD (USDC) stablecoin tokens.
Forbes reported other recipients of the transferred funds as FTX sister trading firm Alameda Research and crypto company Amber Group. Lastly, the report also claimed that Binance moved some of the funds to crypto entrepreneur and TRON founder Justin Sun.
The report drew comparisons between the Binance transferred funds and FTX’s asset shuffling before its epic November collapse.
Binance Airdrop Portal
Late Friday, Binance launched its airdrop portal to keep track of all supported tokens and offer a more streamlined customer experience. The Binance Airdrop Portal establishes itself as a one-stop shop that provides comprehensive information on all available hosted tokens. Available details include the Airdrop Period, Token Status, Snapshot Time, and Mode of Operation.
The platform already has a sizable collection of tokens, including Origin Dollar Governance (OGV), Terra (LUNA), Boba Token (BOBA), and KeyFi (KEYFI).
Binance’s airdrop announcement follows the exchange’s efforts to support victims of the Turkish earthquake via ‘airdroppable’ BNB tokens. Binance pledged to airdrop $100 in BNB tokens to Turkey, with CEO Changpeng Zhao hoping such efforts would relieve those affected.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.