Binance Accused Of Mishandling $1.8b In Client Funds
Binance, one of the world’s largest cryptocurrency exchanges, has come under scrutiny once again. According to a new report from Forbes, the exchange has mishandled $1.8 billion in client funds in 2022. This latest incident is not the first time that Binance has been accused of mixing client funds with the company’s money.
According to a new report from Forbes, Binance mishandled $1.8 billion in client funds, in 2022https://t.co/u26YF6X6qb
— crypto.news (@itscrypto_news) February 27, 2023
The report states that between August 2022 and the end of the year, Binance moved $1.8 billion in client funds that should have been backing up its stablecoin. However, clients were not informed about the transfers, which took place during a time when the crypto markets were in turmoil due to the FTX debacle.
Stablecoin Scrutiny
Stablecoins have faced increased scrutiny in 2023, as central banks prepare to launch their own digital currencies. As a potential rival to CBDCs, stablecoins are becoming more popular. However, with no industry standard, users are left to decide how much transparency they are comfortable with from their stablecoin issuer.
In this case, Binance moved funds that should have been supporting the B-peg USDC tokens, which are a stablecoin tied to the value of the U.S. dollar. When the collateral was moved, the tokens became unbacked, which should have been disclosed to clients.
The majority of the funds were sent to high-frequency trading firm Cumberland, with $1.1 billion sent according to the report. The rest of the money went to now-defunct Alameda Research, as well as Tron.
Trust At Risk
Despite these revelations, Binance has not yet faced any consequences. However, this is not the first time that the exchange has admitted to mixing company money with client funds. Earlier this year, Binance disclosed that it had mixed company and client funds in the same wallet, which drew criticism from many in the crypto community.
The mishandling of client funds by Binance could further erode trust in the cryptocurrency industry. With investors becoming increasingly wary of exchanges and stablecoins, it is important that companies like Binance take responsibility for their actions and work towards rebuilding trust with their clients.
