Binance is addressing the fear, uncertainty and doubt (FUD) centered around crypto exchange platforms after the high-profile downfall of FTX.
In a new company blog post, the world’s largest digital asset exchange by volume explains why some of the common narratives about it being financially unhealthy are untrue.
First, Binance addresses the rumor that it does not have sufficient reserves for users to be able to withdraw coins.
“Binance’s business model is very simple. The platform makes profits mainly by charging transaction fees. The company’s assets are completely separated from users’ managed assets. The capital structure is debt-free. Therefore, Binance’s financial status is very healthy. We have enough capital reserves to cover daily operations. And get through any tough cycles…
Binance will not embezzle users’ funds for any transactions or investments, nor does it have any debts, nor is it on the list of creditors of any company that has recently gone bankrupt.”
Binance also brings up its temporary suspension of USD Coin (USDC) withdrawals, saying that users could still withdraw other stablecoins at a 1:1 ratio while USD Coin was unavailable. The ability to withdraw the stablecoin was halted for about eight hours last week so Binance could conduct a “token swap,” according to a CNBC report.
“It should be emphasized that even during the suspension of USDC withdrawals, users can still withdraw other stablecoins such as BUSD, USDT [Tether], USDP [Pax Dollar], and TUSD [True USD] normally. User funds are supported by 1:1, and there is no liquidity problem.”
Binance goes on to explain the Mazars issue, where a prominent auditing firm announced that it would stop serving crypto clients, sparking a liquidation event. According to the blog post, Mazars stopped working with all firms operating in the crypto space, not just Binance.
“What needs to be explained and clarified is that [audits are] aimed at the financial status of the listed company, not the centralized exchange chain.
The verification of the overall reserve assets on the chain is fundamentally different from the verification of assets on the chain that Binance is calling for. The on-chain verification of the overall reserves of encrypted companies is a very new field.”
Earlier this month, Mazars revealed that Binance has sufficient reserves to back its users’ Bitcoin (BTC).
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