Binance denies customers have been affected by alleged $1.8B stablecoin collateral switch

Binance denied on Feb. 27 that its alleged determination to switch $1.8 billion of stablecoin collateral to hedge funds had any impression on person holdings.

In a press release made to Forbes, Binance chief technique officer Patrick Hillman strongly implied that person funds weren’t used to these ends. He mentioned:

“There was no commingling,” [Hillman said], as a result of “there’s wallets after which there’s a ledger.”

Hillman didn’t immediately state whether or not any funds have been moved, and Forbes maintained that Binance didn’t disclose sure transfers regardless of Hillman’s assertion.

Forbes alleged in the identical report that, based mostly on blockchain information, Binance moved $1.8 billion in stablecoin collateral to quite a few hedge funds.

Notably, Forbes accused Binance of sending $1.1 billion to Cumberland DRW. The agency supposedly helped Binance convert the funds into Binance USD (BUSD).

Forbes moreover mentioned that Binance despatched an unspecified sum of money to Alameda Research — the hedge fund carefully related to the failed FTX alternate. Forbes went on to name Binance’s actions “reminiscent” of FTX’s personal mismanagement.

Forbes additionally named two different entities — Amber Group and Tron — as recipients of “hundreds of thousands of {dollars}” value of collateral in its authentic report. Alameda, Amber Group, and Tron collectively acquired $201 million, in line with Forbes.

Supposedly, the funds moved by Binance have been meant to again its B-peg USDC stablecoins. Forbes referred to those belongings as “digital replicas” of Circle’s USD Coin — or belongings tied to the worth of USDC in order that they are often circulated on Binance’s personal blockchain. If Forbes’ accusations are appropriate, customers might have been left with undercollateralized stablecoins.

Binance has beforehand been the goal of comparable accusations. On Jan. 10, the corporate admitted that its B-peg BUSD token was undercollateralized by as a lot as $1 billion from time to time. The corporate mentioned at the moment that it had improved its practices.

Binance’s stablecoin insurance policies are in flux. Binance CEO Changpeng Zhao just lately mentioned that Binance will cut back reliance on however continue to support BUSD as issuance ends. In September, the alternate mentioned it will reduce support for stablecoins apart from Tether.