This is where the story gets interesting as CZ seems to believe that all will be well at Binance because they do not trade or spend users’ funds. We do not use client funds to deal on our own account.īinance holds all of its clients’ crypto-assets in segregated accounts which are identified separately from any accounts used to hold crypto-assets belonging to Binance and it also uses Binance’s own wallet infrastructure to safeguard user assets and Binance’s own assets. Zhao seeks to reassure investors and staffĬhangpeng Zhao tried to reassure Binance’s army of retail investors in an email, saying: If the investigation goes against Binance and Zhao, it could loosen Binance's grip on the industry,” they added. “The stakes are high for the deeply troubled crypto sector. Others have argued taking time to review more evidence.” The investigation began in 2018 and Reuters said, “Some of the at least half dozen federal prosecutors involved in the case believe the evidence already gathered justifies moving aggressively against the exchange and filing criminal charges against individual executives including founder Changpeng Zhao, said two of the sources. The company stated it was self-sufficient and “financially healthy,” with “no external financing needs and external investors, and no intention to go public at this stage.” A DOJ money laundering investigation adds extra weightĪnother headwind over the last two weeks was news that the Department of Justice (DOJ) was considering whether to file criminal charges against Binance over money laundering accusations. Nansen analyst Andrew Thurman told Coindesk that Binance’s finances were still, “ very much a black box.”Īfter Reuters released an article with a similar accusation, Binance hit back in a blog post but did not seem to want to increase transparency over the firm’s finances.īinance said that it “does not need” to disclose detailed information on its financial status as it is not publicly traded. That total was now said to be around $54.7 billion due to large withdrawals and price fluctuations. The audit is essentially meaningless.Ī month ago, Nansen reported that Binance held $69.5 billion in digital assets in publicly disclosed wallets. In 2005 when I started using a new kind of credit default swap, our auditors were learning on the job. Michael Burry, the famed investor of the “Big Short” film, tweeted: The reports were said to be limited in scope compared to a traditional audit of company accounts and the company was distancing itself from the media attention, according to the Financial Times. Mazars said it had “paused its activity relating to the provision of proof of reserves reports for entities in the cryptocurrency sector due to concerns regarding how these reports are understood by the public”. The problems started for Binance last week when the audit company Mazars removed a web page related to its work with Binance and said that it had halted its work on “proof of reserves” reporting, with Binance,, and KuCoin.
Investors are spooked over reserves and audits Last week, Binance saw its highest daily withdrawals since June, with net outflows of $3 billion in a 24-hour period, according to Nansen. The company has a daily trading volume of $7.8 billion, which is huge compared to its nearest big-name rival Coinbase ( COIN), which has $1.1 billion. Binance would be a big scalp and could lead to an even bigger fallout than FTX. Only a month later, it is Zhao who is having to deflect concerns over the soundness of his exchange.
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As FTX collapsed, Binance was left standing at the top of the mountain with its CEO preaching about how to handle customer funds. It was CZ who triggered the initial run on the FTX exchange and its ultimate collapse when he announced that his firm was selling all of its FTT tokens- the native coin of the FTX exchange. The rival Binance exchange, and its CEO Changpeng Zhao, or CZ, is now facing a similar predicament.
with his $32 billion empire now in messy bankruptcy proceedings. Six months later and he is under arrest after being extradited to the U.S. In the summer of 2022, Sam Bankman-Fried was likened by Fortune to John Pierpont Morgan for bailing out crypto firms in the bear market. It has been a year of hero-turned-villain in the cryptocurrency market. Binance is under pressure over its finances In this article, I will dig deeper into the finances and criticism of Binance and the outlook for the BNB token ( BNB-USD ). As the dust settles on the collapse of the FTX ( FTT-USD) cryptocurrency exchange, attention has now turned to the financial soundness of the Binance exchange.
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