Rumours, FUD, real problems: it’s been hard to sort out what’s really going on at the Binance exchange platform these days. Beyond the media storm, is there really any reason to worry? We take stock of the situation
Binance: what’s going on on the biggest trading platform
Since the fall of the giant FTX, there has been a lot of distrust of trading platforms. And Binance, the world’s largest exchange, is not immune. The platform has seen doubts raised about its reserve evidence, especially since the company that audited it stopped offering its services.
As a reminder, Binance has made a number of initiatives to prove its financial stability: the platform had published the addresses of its wallets in a public way, had contributed to its emergency fund, had created a common fund with other companies, and had carried out an audit to prove that it was indeed holding the bitcoins (BTC) of its customers.
But this seems not to have been enough. Several elements have once again rekindled the community’s distrust. First, an interview with Changpeng Zhao, who seemed visibly uncomfortable when asked by a journalist. The video clip, which was widely shared on Twitter, shows a hesitant Binance CEO when asked if he could get $2 billion out of his platform.
However, as several commentators have pointed out, Changpeng Zhao was not talking about user withdrawals, but about an amount paid by FTX to Binance, which could eventually be returned:
This @cz_binance clip is going viral but lacks context.
Question: Could Binance handle someone asking for $2.1billion back?
CZ avoids answering directly: “we are financially strong”
This wasn’t about customer deposits, it was about $2.1B FTX paid them.pic.twitter.com/fcpWX5BXvm
– Luke Martin (@VentureCoinist) December 15, 2022
The “FUD” around a possible $2 billion withdrawal is therefore based on a partially truncated context. Especially since Binance made $3.6 billion in withdrawals last week, apparently without any particular problem.
Binance’s auditing firm ceases services, CryptoQuant comes to the rescue
But the controversy flared up again over the weekend, as news broke that Mazars, the company that audits Binance, had removed the company’s page from its website… And stopped providing services to crypto companies. A point considered worrying by the community, which shows the difficulty for crypto companies to show their credentials. At least, that’s what Changpeng Zhao said – wrongly or not – when he explained that large auditing firms are not suitable for crypto companies.
In the meantime, analysis firm CryptoQuant came along, and claimed that Binance’s reserves were compliant, managed in the usual way, and out of line with FTX’s. It also stressed that the platform was not overexposed to its own token, unlike FTX: its reserves in BNB correspond to about 10% of total reserves.
So what can we learn from all this? There are certainly some points of concern to watch out for, but they do not necessarily mean that Binance is in danger. These include the somewhat evasive answers from Binance, the unexpected departure of Mazars, and the fact that the company does not yet have a full audit.
On the other hand, it should be pointed out that Binance’s addresses have been available for consultation for several weeks now, and seemed to correspond to the company’s statements from the outset. A point that was also made by CryptoQuant, which highlighted Binance’s apparent health. The efforts of the largest exchange platform to show a clean bill of health are also evident, and the establishment of several reserves supports this.
We will leave it to everyone to draw conclusions, and we will remind you that periods of strong emotions are not necessarily those that allow us to have the clearest vision of an entity. The use of “cold” portfolios also makes it possible to limit the risks: a fact to be kept in mind in these times of uncertainty.
