Connect with us
Active Currencies 12834
Market Cap $2,039,993,512,781.40
Bitcoin Share 49.20%
24h Market Cap Change $-2.24

Binance reportedly moved $1.8 billion of collateral backing customers stablecoin

2min Read
Binance reportedly moved $1.8 billion of collateral backing customers stablecoin

Share this article



  • Binance moved over $1 billion of customer funds meant as reserves for B-tokens last year
  • The funds were sent to firms like Alameda Research, Cumberland, and Tron
  • Binance CSO stated that there was “no commingling of funds”

Binance – the world’s largest crypto exchange – continues to be embroiled in controversies. The latest report by Forbes states that the crypto exchange moved $1.8 billion of collateral backing customers’ stablecoin without their knowledge. The incident took place from August 2022 to December 2022, at a time when the crypto market had seen a major slump as a result of FTX’s collapse.

Binance moves funds to various firms

Moreover, the collateral that was transferred out belonged to customers holding B-peg USDC tokens. This rendered the token unsecure despite the exchange claiming otherwise. Binance-peg tokens aka B-Tokens are tokens minted by Binance on BNB Chain, which are pegged to leading cryptocurrencies. The crypto exchange currently mints a total of 97 B-Tokens, and one of them is pegged to Circle’s stablecoin – USDC.

According to February 27 report, the crypto exchange sent $1.1 billion of customer funds to Cumberland, a high-frequency trading firm. The firm reportedly might have converted the collateral to Binance USD (BUSD). Moreover, Cumberland was not the only firm to receive the money. Firms like Amber Group, the infamous and now-bankrupt Alameda Research, and Tron received millions of dollars.

Speaking on the matter, CSO Patrick Hillmann stated that this move was part of Binance’s “normal business conduct”. He further stated that “there was no commingling” of funds as “there’s wallets and then there is a ledger.”

Binance admits to a mistake with customer funds and B-Token reserves

Prior to this report, in January 2023, Binance stated that it had mistakenly kept customer funds and crypto asset collateral in the same wallet. According to Bloomberg, the crypto exchange had stored nearly half of B-tokens reserves in a cold wallet labeled Binance 8. The wallet, however, had more tokens than the B-tokens that were minted, indicating that the collateral was more than a 1:1 ratio.


Speaking about this, a Binance spokesperson stated that “collateral assets have previously been moved into this wallet in error and referenced accordingly”. The spokesperson also stated that Binance was rectifying the mistake. The spokesperson further added that the tokens “have been and continue to be backed 1:1.”


Share

Priya is a freelance cryptocurrency writer at AMBCrypto. A student in business administration, Priya focuses on the latest developments in the cryptocurrency and blockchain technology space.
Read the best crypto stories of the day in less than 5 minutes
Subscribe to get it daily in your inbox.
Please check the format of your first name and/or email address.

Thank you for subscribing to Unhashed.