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    Home»News»Binance Denies Claims of Improper Use of $1.8B of Users’ Funds
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    Binance Denies Claims of Improper Use of $1.8B of Users’ Funds

    Anietie DavidBy Anietie DavidFebruary 28, 2023Updated:February 28, 2023No Comments3 Mins Read
    Binance Denies Claims of Improper Use of $1.8B of Users' Funds
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    Binance, the world’s largest cryptocurrency, denied a report published by Forbes titled “Binance’s Asset Shuffling Eerily Similar To Maneuvers By FTX,” which argues that the crypto giant transferred $1.8 billion associated with its users’ funds.

    According to Forbes, Binance “quietly” pledged $1.8 billion “as collateral in stablecoins to support its customers” between August 17 and early December 2022, leaving many of its users with unbacked funds. This is despite the fact that the company claims to have fully audited its reserves and never touched customer deposits.

    According to the report, Binance transferred the collateral to hedge funds including Alameda and Cumberland/DRW and did so without informing its customers. According to blockchain data from Aug. 17 to early December examined by Forbes, a period which encompassed the collapse of fellow crypto exchange FTX, holders of more than $1 billion of crypto for B-peg USDC tokens had no collateral for instruments that Binance said would be fully backed by the token they were pegged to. B-peg USDC are digital replicas of dollar-pegged stablecoin USDC.

    Forbes also claims that other relevant players in the crypto ecosystem such as Amber Group, Sam Bankman-Fried’s Alameda Research and Justin Sun ) received hundreds of millions of dollars in funding from Binance.

    Forbes suggested that the manner in which the debtor manipulated its clients’ funds mimicked the operations conducted by FTX prior to the bankruptcy filing. US investigators claim that FTX was even banned from sending money to Alameda Research.

    The article states that just because the exchange is not regulated as a standard financial company, that automatically means its transactions are illegal. However, it makes it easier for regulators to require regulated entities to be separate from custodians of client assets.

    Binance Responds to Forbes’ Allegations.

    Binance responded to Forbes’ allegations of mishandling user funds, denying any wrongdoing. The company’s spokesperson assured the transactions in question were part of their internal billing processes and did not affect the collateralization of user assets.

    “While Binance has previously acknowledged that wallet management processes for Binance-pegged token collateral have not always been flawless, at no time was the collateralization of user assets affected. Processes for managing our collateral wallets have been fixed on a longer-term basis and this is verifiable on-chain.”

    Later on, the CSO, Patrick Hillman, explained that capital movements between wallets were normal and that the exchange does not mix its assets with clients’ funds. He invited interested parties to verify the veracity of their claims in public blockchain records.

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    Anietie David

    Anietie has worked in the blockchain industry for three years, gaining experience in blockchain technology, cryptocurrencies, DeFi, and NFTs. As a seasoned content writer, he is passionate about creating effective content strategies for blockchain brands. In addition to content writing, he also has a strong interest in front-end development. When he's not working, he spends his time reading horror novels or playing CODM.

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