Binance, the largest cryptocurrency exchange in the world, is once again embroiled in controversy, following a new report from Reuters citing three unnamed sources. According to the report, Binance allegedly commingled billions of dollars’ worth of customer funds in 2020 and 2021. One of the sources, who claims to have direct knowledge of the Binance group’s finances, said that the now-defunct Silvergate Bank was used to commingle these funds on an almost daily basis.
While this isn’t the first time incriminating reports have emerged about Binance, the company has always been vehement in its denials. On this occasion, Binance’s chief communications officer, Patrick Hillman, took to Twitter to dismiss the claims, arguing that there was no reason for Reuters to continue “making stuff up.”
Although the report couldn’t independently verify the figures or the frequency of the transactions, it did note that there was no evidence Binance lost the supposedly commingled funds. The controversy, however, centers around Binance’s stablecoin, Binance USD (BUSD), which was allegedly used to credit customers’ accounts when they were depositing U.S. dollars.
BUSD’s market capitalization has decreased from $16 billion to $5 billion since the SEC sent a Wells notice to New York-based firm Paxos, warning that it intended to litigate over the stablecoin for “violating investor protection laws.” Paxos halted the minting of BUSD in February following the SEC’s notice.
Critics stress that customers should not need a forensic accountant to locate their funds, pointing to the potential risks associated with Binance’s practices. According to the report, three former U.S. regulators underscored the dangers of customers not knowing where their funds actually reside, which in turn puts their capital and assets at risk.
Nevertheless, it’s important to remain cautious about the veracity of the allegations, and to remember that no concrete evidence has been found so far to corroborate the claims. Moreover, Binance, despite its history of regulatory shortcomings, has remained consistent in its denials of wrongdoing.
In conclusion, this recent accusation against Binance raises yet more questions regarding the exchange’s operational integrity and the security of its customers’ investments. However, until conclusive evidence is presented, the debate over Binance’s practices will continue to simmer. With millions of investors devoting their trust to cryptocurrency markets, it’s essential that exchanges such as Binance maintain transparency and provide reliable services for users navigating the rapidly evolving landscape of digital assets.