According to a new report from Forbes, Binance quietly moved $1.8 billion of collateral backing its customers’ stablecoins without telling them. Allegedly, the vast majority of client funds, or $1.1 billion, were transferred to Cumberland, the crypto trading arm of Don Wilson’s DRW. Binance officials made a statement against these scandalous allegations.
Binance responded to Forbes’ scandalous allegations!
Binance, the world’s largest cryptocurrency exchange, has been on the target lately. The stock market, which has been squeezed by the US SEC due to its stablecoin, Binance USD (BUSD), is also shaken by different claims. Finally, a Forbes report the crypto exchange carried ‘$1.8 billion collateral held by customers to support stablecoins’. The claim focuses on the fact that while doing this, it does not provide any information to its customers. Forbes said that Binance used the assets for ‘other undisclosed reasons’ and did so without informing its customers. Blockchain data from August to early December is cited as evidence in the report.
However, Binance denied the allegations on this subject by making a statement. Making a statement on the subject, Binance spokesperson emphasized:
Identified on-chain transactions are related to internal wallet management. Binance acknowledges that wallet management processes for token collateral previously pegged to Binance are not always seamless. However, collateralization of user assets was never affected. The processes for managing our collateral wallets are fixed for longer term. This can also be verified with on-chain data.
Patrick Hillman: This is usual practice
According to Blockchain data reviewed by Forbes, over $1.8 billion in client funds have been distributed, all made up of stablecoin USD Coin (USDC) tokens. The vast majority of client funds, or $1.1 billion, were transferred to Cumberland, the crypto trading arm of DRW, a Chicago-based high-frequency trading firm of Don Wilson. According to the Forbes report, it may have assisted Binance in its efforts to convert the collateral into its own Binance USD (BUSD) stablecoin.
Meanwhile, other recipients of the funds include Sam Bankman-Fried’s Alameda Research, Amber Group, and Justin Sun, founder of Tron. Binance chief strategy officer Patrick Hillman told Forbes that moving funds between multiple wallets is not an issue and is common practice at the firm. Hillman said, “There was no confusion. Because there are wallets and a notebook in the middle,” he said, noting that this is a normal practice.
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