According to Bloomberg, the world’s largest cryptocurrency Binance, the exchange, acknowledged past flaws in the management of stablecoin reserves, which at times led to more than $1 billion in collateral.
The price of stablecoin BUSD, branded by Binance but launched and managed by a different company, the Paxos Trust, should normally maintain a fixed price of $1 thanks to the reserves it receives.
Binance Spokesperson Admits There Has Been Problems With The Collateral Behind BUSD In The Past, According To Bloomberg
Binance stated that the “peg”, which stands for the amount of BUSD locked as collateral to support its own token, has suffered in the past but is now solid.
“The process of maintaining anchoring involves many teams and has not always been seamless, which may have caused operational delays in the past,” a Binance spokesperson told Bloomberg News.
“Recently, the process has been made a lot better with improved mismatch checks to make sure it’s always fixed 1-1.”
In his statement to Bloomberg, a Binance spokesperson also added that BUSD is currently fully backed by collateral and that Paxos has had no negative impact on the BUSD it has launched.
“Despite differences in data, refunds for users were not affected at any point,” the spokesperson said, not specifying how long BUSD was under-collateralized or when the exchange noticed and fixed the issue.
Data compiled by Jonathan Reiter, co-founder of Blockchain analysis company ChainArgos and analyzed by Bloomberg News, shows that BUSD is frequently under-collateralized between 2020 and 2021, Bloomberg claims.
According to Reiter’s calculations, the difference between reserves and supply in three separate instances exceeded $1 billion. A blockchain node needs to be running in order for the data to be publicly visible.
*Not investment advice.
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