Binance addresses all recent FUD in blog post

The crypto exchange Binance has prepared answers to all the latest media FUD in its blog. Let’s review the points together and see if the exchange has answered all the questions.

The blog post starts with “After the stress test, we will win the trust of more users.” Recall the stress test in question:

We saw some withdrawals today (net $1.14b ish). We have seen this before. Some days we have net withdrawals; some days we have net deposits. Business as usual for us.

I actually think it is a good idea to “stress test withdrawals” on each CEX on a rotating basis.

1/2 https://t.co/uF9lLPDSyS

— CZ Binance (@cz_binance) December 13, 2022

The stress test followed the news that Binance temporarily halted USDC withdrawals. The largest exchange then gave the reason for the halt and emphasized the temporary nature of the problem, promising that given time it would be fixed. But the community was already shaken by recent FUD media coverage of Binance. This resulted in massive users and net outflows.

More on the USDC episode: Binance halts USDC withdrawals

1. About the temporary suspension of USDC withdrawals

The problem occurred when the demand for USDC withdrawal increased sharply. Since Binance did not have the necessary amount of USDC due to the conversion to BUSD on September 5, they had to wait until the morning, when the banks started work to ensure the withdrawal of funds. Yet, Binance managed the situation exactly as it stated.

It should be emphasized that even during the suspension of USDC withdrawals, users can still withdraw other stable coins such as BUSD, USDT, USDP, and TUSD normally. User funds are supported by 1:1, and there is no liquidity problem.

You can read how the situation unfolded here: Crypto Digest From TradeCrypto.com #190

2. Binance does not have sufficient reserves for users to withdraw coins

Replying to this FUD, Binance assures all customers’ funds are fully backed and are available for withdrawal anytime.

Although between December 12th and 14th, the platform’s net withdrawals reached 6 billion US dollars, we have withstood the test. Facts have proved that we will win the trust of more users after this turmoil.

This fact is difficult to verify because it would require millions of users to leave the exchange at once. We could trust this claim if we had proof of reserves. However, that does not exist at the moment. This brings us to the third question.

3. Questions about Mazars and Big Four accounting firms refusing to serve Binance

So that we don’t repeat ourselves, you can read this article: Big accounting firms won’t audit Binance.

In the blogpost, Binance again stresses:

Mazars against Binance? – Regarding Mazars, the company stopped working with [all crypto companies] including Binance, not just Binance.

The Big Four also rejected Binance? – For traditional accounting firms, it is very difficult to verify the overall reserve assets on the chain of encrypted exchanges

4. Why is only BTC verification launched?

Mazars checked only the BTC reserves of Binance. Binance’s bitcoin reserves are overcollateralized. Saying it’s just a first step, Binance assures proof-of-reverses of other assets is soon to come.

Read the report here: Binance’s bitcoin reserves are overcollateralized.

The reserve verification of the second batch of assets will be launched soon, and you are welcome to pay attention to the Binance Asset Reserve Proof System to check the latest progress.

5. Reports on “Binance Refuses to Disclose Financial Information” and “Financial Black Box.”

According to a Reuters article, Binance’s refusal to disclose the company’s financial state is yet another red flag that it may be insolvent.

Binance’s response:

Binance does not need to disclose detailed financial status for two reasons: first, listed companies must disclose company financial details to their investors, but Binance is a private company, not a listed company; second, Binance is financially healthy Self-sufficient, no external financing needs and external investors, and no intention to go public at this stage.

6. Regarding Reuters’ report “U.S. Department of Justice launches investigation into Binance.”

Sources familiar with the matter reportedly told Reuters that Binance and CZ would soon be prosecuted, as solid evidence had emerged in the 2018 case. Binance didn’t explicitly deny the media report, yet it said it doesn’t agree at all with several phrases Reuters used:

Although there is room for ambiguity in some descriptions in the report, such as “internal disputes” and “possible out-of-court settlement”, some readers are only willing to believe the eye-catching headlines. We are currently unable to respond to any controversial judicial discussions.

7. About Binance destroying FTX?

Finally, we have reached this point. As you may remember, it all started with a text from Coindesk about the problems of FTX. After that, Binance wanted to buy FTX but refused because the company was insolvent. We talked a lot about it in the digests and on the website.

Read: FTX CEO Transferred Customer Deposits to Help His Other Company

CEO of Binance, Changpeng Zhao, clearly responded to such accusations:

2 “FTX was killed by xyz (ie, a 3rd party)”

No, FTX killed themselves (and their users) because they stole billions of dollars of user funds. Period.

— CZ Binance (@cz_binance) December 6, 2022