In an article published yesterday, Forbes once again attacked the world’s largest cryptocurrency exchange Binance for alleged misconduct in handling customer funds. CEO Changpeng Zhao, better known as “CZ,” vehemently denied these claims today, accusing the news outlet of intentional false representations.
These Are the Allegations Against Binance
Forbes alleges in the article published Monday that Binance transferred $1.8 billion in collateral to hedge funds such as Alameda and Cumberland/DRW last year, which was intended to back their customers’ stablecoins. The problem does not revolve around Binance pegged USD (BUSD), but B-peg USDC.
The investigation of blockchain data from August 17 to early December concluded that there was no collateral for the B-peg stablecoin, although the exchange said they were fully backed. Customer funds meant to back the USDC digital replicas could thus have been used to fund other trades, similar to FTX.
CZ responded to this allegation today, questioning the integrity of Forbes.
I am reluctantly spending time on FUD again (4). Forbes wrote another FUD article with lots of accusatory questions, with negative spins, intentionally misconstruing facts. They referred to some old blockchain transactions that our clients have done.
CZ discussed that Forbes named Tron, Amber Group, Alameda Research, etc. and doesn’t seem to understand the basics of how an exchange works. “Our users are free to withdraw their assets any time they want. Their withdrawals are turned into received hundreds of millions of shifted collateral.”
As the CEO further explains, the article disregards the fact that users must first deposit funds with Binance in order to make withdrawals that have not been investigated. Furthermore, CZ states:
The article tries hard to categorize Binance and FTX together, including the choice of the article title. We are different. Binance has stood the test of time, with users safely withdrawing billions of dollars in December.
In addition, Binance’s CEO emphasized that the exchange has implemented a proof-of-reserves with a new Zero Knowledge (ZK) approach, proposed by Ethereum co-founder Vitalik Buterin, that protects user security and privacy. “Binance holds user funds, 1:1, always,” CZ continued, closing his rant:
I am deeply disappointed that Forbes continues to write baseless articles, losing their own credibility.
The Forbes article comes after the largest U.S. crypto exchange Coinbase announced yesterday that it will cease trading the stablecoin BUSD. The stablecoin issued by Paxos was scrapped after the Securities and Exchange Commission (SEC) issued a Wells Notice against its issuer, and can be redeemed until February 2024.
At press time, BNB traded at $301.68, still holding the above the 200-day Exponential Moving Average (EMA).