Binance has been under pressure as it continues to deal with the oppressive news cycle, seeking to cast fear, uncertainty, and doubt (FUD) over the world’s largest centralized exchange. The firm has recently released a new blog post exclusively in Chinese (at the time of writing) addressing seven key issues the company is facing. In this article, we’ll cover the topics discussed and Binance’s official response.
Temporary Suspension of USDC Withdrawals
The company recently faced concerns after temporarily pausing USDC withdrawals for approximately eight hours earlier this month. This caused speculators to assume that the exchange was facing liquidity issues. A harrowing thought for a community that is still reeling from the latest exchange collapse.
The blog post highlighted Binance’s recent decision to automatically convert selected stablecoins (including USDC) into BUSD on the platform. When a large-scale USDC cash-out occurs, the platform must convert BUSD to USDC first. This conversion method is still reliant on passing through a U.S. dollar account within a bank in New York, which can only occur during the bank’s business hours. This caused a delay for those wishing to withdraw USDC during that eight-hour window.
There are not enough reserves on Binance for Users to Withdraw
Binance has once again reiterated that “all user’s assets in Binance are supported 1:1”. The post stated that the platform mainly collects transaction fees to make profits and that the company’s assets are completely separated from the user’s managed assets.
The post even managed to sneak in a humble brag when it mentioned that Binance Labs maintains a historical return on investment of up to 2100%.
Mazar’s and the “Big Four” Auditing Firms Cease Crypto Audits
Next up is Mazars, the accounting firm that has ceased all of its crypto auditing operations. The post highlighted that even the “Big Four” accounting firms would find it very difficult to verify the overall reserve assets of any exchange and that an audit is fundamentally different from traditional audits.
It said that encrypted on-chain verification was a new field that these companies may not have the capacity to carry out. Still, Binance is currently seeking companies willing to provide verification services.
Why Have They Only Released Proof of Reserves for BTC holding?
Binance paved the way for exchange transparency but has received backlash for its limited response. Currently, the firm only lists its BTC holdings, but according to the blog post, this will change very soon with the second batch of assets about to go online.
Binance is a “Financial Black Box”
Recent reports from blockchain analysts have labeled Binance a “Financial Black Box.” The official statement from Binance is that it does not have to disclose a detailed financial status for two reasons: first, it is not a publicly traded company; second, Binance is financially self-sufficient and doesn’t need external funding. In addition, it has no “intention to go public at this time.” Enough said…apparently.
The Reuters “US Department of Justice looks into Binance” article
Reuters recently published an article claiming that the U.S. Department of Justice prosecutors are delaying the conclusion of a long-running criminal investigation into Binance concerning anti-money laundering laws.
The article mentioned that this is not the first, nor will it be, the last time a publication has reported such intentionally ambiguous facts surrounding the exchange. The post would mention its extensive compliance/permit/license background and its strong financial commitment to aiding and educating law enforcement on cybercrime investigations.
Did Binance destroy FTX?
This one is most likely a continual sore spot for Binance CEO Changpeng Zhao, who has discussed this topic thoroughly. (TWEET HERE since its so short and pretty much sums it up)
In its continuing effort for cooperation within the industry, the blog post mentioned that it does not view other exchanges as competitors. It instead chooses to focus its time and resources on promoting and expanding industry adoption and welcomes more exchanges to enter the field.
And that’s it. Has the FUD been addressed? Do you still have questions or concerns? Make sure to check back on Blockbytes for the latest updates.