Is Binance Misusing Customer Funds?
Forbes has accused Binance of the “backroom maneuver,” claiming the exchange transferred $1.78 billion in stablecoin to hedge funds.
Forbes once again investigated the on-chain activities of Binance and discovered that the exchange transferred $1.78 billion in users’ funds to various hedge funds. The article reveals that the Changpeng Zhao-led exchange completely emptied the collateral of B-peg USDC without reducing supply.
But the community suspects Forbes of spreading fear, uncertainty and doubt (FUD) against Binance.
Is Binance breaking its own rules?
Binance issues a B token to facilitate the use of other blockchain tokens in the BNB chain. The exchange is supposed to issue the B token only after storing 100% security of the original token. For example, for every 100 B-USDC, it must have 100 USDC as collateral.
However, the exchange broke its rules on August 17, withdrawing $3.63 billion from its bond. wallet to “Binance 8” cold wallet. It then returned $1.85 billion to the peg wallet, but transferred the remaining $1.78 billion to a Binance 14 cold wallet. Later, the exchange distributed the funds to a trading firm, Cumberland, Amber Group, Alameda Research and TRON founder Justin Sun.
A Binance spokesperson clarified in January that the token funds were mistakenly moved to cold wallets. Patrick Hillmann, Chief Strategy Officer of Binance, told Forbes that “There was no mix-up” and it was normal business conduct.
B-USDC had zero collateral for four months
When Binance cashed out $1.78 billion USDC on August 17, it did not reduce the supply of B-USDC. The security fell to zero, and the exchange did not correct it for four months.
The article also states that B-USDC had a shortfall of over $1 billion on three separate occasions. Forbes believes Binance is misusing its customers’ funds, just like the bankrupt exchange FTX.
Forbes vs. Binance?
But on various occasions the community has pointed out that the publication has a soft spot for Sam Bankman-Fried while triggering FUD against Changpeng Zhao. Last year, crypto lawyer Irina Heaver tweeted that Forbes reports “lies and misinformation”. Zhao also sued Forbes for defamation and later dropped the case in 2020.
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