Cryptocurrency exchange Binance has been in hot water after it emerged that $1.8 billion of collateral meant to back its customers' stablecoins had been moved to hedge funds without informing customers.
The tokens in question - digital replicas of USDC - were reportedly uncollateralized despite Binance's claims that they were 100% backed.
In the wake of the news, Binance's Chief Strategy Officer, Patrick Hillman, replied that the movement of money among wallets was common practice and not a problem. He argued that because there is a ledger and wallets, "there was no commingling".
Binance CEO Changpeng Zhao then took to Twitter to accuse Forbes of "intentionally misconstruing facts". He claimed that users can withdraw their assets at any time and that calculations can be traced on the blockchain.
A Binance spokesperson also reassured customers that their assets are stored in segregated accounts and that the transactions identified by Forbes were related to wallet management and not the collateralization of user assets.
Key Points:
- Binance moved $1.8 billion of collateral meant to back its customers' stablecoins to hedge funds last year.
- The tokens in question were digital replicas of dollar-pegged stablecoin USDC.
- Binance maintains that the money was moved among wallets and there was no commingling.
- CEO Changpeng Zhao accused Forbes of "intentionally misconstruing facts".
- A Binance spokesperson clarified that user assets are stored in segregated accounts.
TL;DR:
Cryptocurrency exchange Binance has been accused of moving $1.8 billion of collateral meant to back its customers' stablecoins to hedge funds without informing customers. Binance CEO Changpeng Zhao has defended the exchange and accused Forbes of misconstruing facts. A Binance spokesperson said that user assets are stored in segregated accounts.