Binance which is the largest cryptocurrency exchange in the world today denied a report published by some media that stated that the crypto exchange has transferred $1.8 billion associated with its user funds.
Binance is said to have quietly transferred $1.8 billion deposited “as collateral intended to support its client stablecoins. This indirectly leaves many of its users with funds not backed by cash.
This is despite the company claiming that it has fully audited its reserves and has never touched its customers' deposits.
The media reported that $1.1 billion of funds taken from clients in USDC tokens, a stablecoin issued by Circle, was sent to Cumberland/DWR, a high-frequency trading firm based in Chicago. The media stated that the company “may have helped Binance in its efforts to turn the collateral into its own Binance USD (BUSD) stablecoin.
Binance however did not stay him and responded to allegations of misappropriation of user funds, denying any wrongdoing. A spokesperson for the company assured that the transaction is part of their internal billing process and does not affect the guarantee of the consumer's assets.
“Although Binance has previously acknowledged that the wallet management process for Binance-pegged token collateral is not always perfect, user asset collateral is not affected. The process for managing our collateral wallets has been established on a long-term basis and this is verifiable on-chain.”
Binance CSO Patrick Hillman explained that the movement of capital between wallets is normal and that the exchange does not mix its assets with client funds. He welcomes interested parties to verify the truth of their claims in public blockchain records.
However, the Binance stablecoin is currently under regulatory scrutiny. Paxos stopped printing it after learning that the SEC was investigating the firm, and US exchanges were already watching them, with Coinbase taking the first step and delisting the busd token.
