We do the research, you get the alpha!
Binance has published a lengthy statement in response to “recent media and community questions” regarding the company’s financial health in the wake of the collapse of rival crypto exchange FTX.
“FTX fell because it misappropriated user assets, and a healthy company will not be destroyed by a tweet,” read a translated version of the article posted to Binance’s Chinese blog.
In the article, titled “Facing FUD,” Binance hit back at allegations that its finances are a “black box,” raised in a recent Reuters article.
The firm wrote that it “does not need” to disclose detailed information on its financial status since it isn’t a publicly traded company. Binance added that it is self-sufficient and “financially healthy,” with “no external financing needs and external investors, and no intention to go public at this stage.”
The canceled Mazars audit
Binance’s most recent attempt to reassure customers about the state of its finances backfired when auditing firm Mazars pulled its proof-of-reserves assessment of the exchange from its website, and—according to Binance—dropped crypto firms as clients.
“The company stopped working with [all crypto companies] including Binance, not just Binance,” contested the exchange in its most recent blog post. It noted that traditional accounting firms, including the ‘Big Four,’ find it “very difficult to verify the overall reserve assets on the chain of encrypted exchanges,” adding that, “on-chain verification of the overall reserves of encrypted companies is a very new field.”
Earlier this month, users withdrew their funds from Binance en masse; much of that fear stemmed from Binance’s delay in satisfying USDC withdrawals at the time, which have since resumed and are processing normally.
“All users' assets in Binance are supported 1:1, and users also have the right to withdraw coins at any time,” said Binance. It explained that the delay on USDC withdrawals was due to Binance’s need to convert its BUSD holdings back into USDC.
In the blog post, Binance noted it has a debt-free capital structure, funds its daily operations through user transaction fees, and does not misappropriate user assets. It also hit back at allegations that it sought to “destroy” FTX, levied by the likes of former FTX CEO Sam Bankman-Fried and former FTX spokesperson Kevin O’Leary.
“Binance will not regard other exchanges as ‘competitors,” the exchange wrote, adding that it’s focused on “promoting and expanding industry adoption” and hopes to see more exchanges coexisting in the crypto ecosystem.