Report Claims Binance Commingled User Funds Similar to FTX
A new report claims Binance commingled different investors’ funds last year in a move "eerily" similar to actions by now-defunct cryptocurrency exchange FTX.
The world’s largest crypto exchange moved $1.8 billion of collateral set to back its customers’ stablecoins late last year, putting the assets to other undisclosed uses, Forbes reported Monday, noting that the practice was similar to maneuvers by FTX.
More specifically, holders of more than $1 billion of B-peg USDC tokens, which are digital replicas of USDC that exist on Binance’s proprietary Binance Smart Chain, were left with no collateral from August 17 to early December despite Binance claiming such instruments are 100% backed by whichever token they were pegged to.
According to the report, Binance sent $1.1 billion of that funds, which were collateral set to back the B-peg USDC stablecoins, to Chicago-based high frequency trading firm Cumberland/DRW. The report speculated that Binance could have used the funds to swell its own stablecoin BUSD.
"Cumberland may have assisted Binance in its efforts to transform the collateral into its own Binance USD (BUSD) stablecoin."
Furthermore, other hundreds of millions of shifted collateral from Binance was funneled to Amber Group, Sam Bankman-Fried’s Alameda Research, and Justin Sun’s Tron, Forbes said, citing blockchain data for Binance digital wallets.
Meanwhile, Binance’s chief strategy officer Patrick Hillmann claimed that the movement of funds is part of the exchange’s normal business conduct. He also refuted claims that there was a commingling of funds.
"Binance does not, and has never, invested or otherwise deployed user assets without consent under the terms of specific products. Binance holds all of its clients’ assets
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