John Reed Stark, former official of the US Securities and Exchange Commission (SEC), accused the world’s largest crypto exchange Binance of shadow banking and suggested that an FTX-like bankruptcy was inevitable.
He served as the head of the internet application office and executive lawyer in the SEC. John Reed Stark a recent social media in your postmade heavy accusations against Binance. Stark, known for his anti-cryptocurrency, forbes In his post, which featured an article shared by Binance, he described Binance as a financial service provider without being involved in any audit. “shadow bank” (institutions that are not subject to banking regulations even though they carry out transactions similar to banking transactions):
My view is that Binance is a shadow bank. It engages in limited order books/brokerage/guardianship/barter/settlement/etc and continues to issue its own counterfeit currency without US regulatory oversight or control. An epic bank run like FTX seems inevitable.
Stark, who does not hesitate to compare the situation of Binance with FTX, said that users will panic and withdraw their funds from Binance en masse (bank run), and this situation will affect Binance. will inevitably lead to FTX-like bankruptcy. expressed.
Proof of reserve reports submitted by Binance in previous processes unreal Stating that the situation of Binance, Stark More obscure than FTX he claimed to be.
On the other hand, Binance has continued to maintain its clear stance and reassure its customers against similar situations so far. In the past period USD Coin (USDC) post- 6 billion dollar fund outflow in 2 days Living Binance successfully survived this stress test. Binance, which has succeeded in meeting the fund outflow that will drag FTX into bankruptcy, without any problems, has not been able to accept such news in the media. “to get clicks” He claimed he did.
After such situations, the exchange will ensure that all user funds are 1:1 ratio safe He gave detailed information about how he was guaranteed.