Particularly, Forbes article claimed Binance circulated $1.8B in collateral for the USDC stablecoin issued on BNB Chain to hedge funds like Alameda Research, Amber Group and Cumberland without notifying customers. The recorded time is mid-August 2022 to early December 2022, which is right after the 3AC-Celsius-Voyager liquidity crisis.
The article also alleged that Binance transferred 1.1 billion USDC to Cumberland, an investment fund based in Chicago (USA), in order to convert it into Binance’s own stablecoin BUSD to increase market share.
During the time of USDC outflow, Binance still did not burn USDC issued on BNB Chain, meaning they were not fully securitized.
Binance Chief Strategy Officer Patrick Hillman confirmed to Forbes that it is normal for the exchange to regularly transfer funds between wallets and is not a problem, pledging not to mix customer funds and maintaining its accounting records. full.
The spokesperson also said that the transactions identified by Forbes relate to internal wallet management 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,” the spokesperson wrote. “Processes for managing our collateral wallets have been fixed on a longer-term basis and this is verifiable on-chain.”
In January 2023, Binance admitted to keeping customer deposits with collateral for derivative tokens in the same wallet and pledged to make adjustments to fix the issue. In 2021, the exchange also failed to maintain enough funds to guarantee the value of stablecoin BUSD.