What’s going on with Binance?
The exchange continues to face a strong outflow of funds from users after contract accounting firm Mazars suspended work on crypto projects.
But now things are getting even worse: Allegedly, none of the top four auditing firms want to perform proof of reserves at Binance.
The volume of exchanges as well as the price of the BNB record losses. The price of BNB has fallen over 12% in the past seven days.
The world’s largest crypto exchange has been under increased pressure for days. Users have withdrawn tens of billions from the exchange over the past week, including after Mazars stopped working on crypto projects and removed proof reserve from the site. This is fueling uncertainty for many investors after the FTX crash has already caused a major loss of confidence.
After the collapse of FTX, there is an increased demand from crypto investors for security in the custody of their funds. A number of investors are unsure whether the exchange has enough reserves to pay all customers in the event of increased withdrawals.
For several days, there has been an intense discussion on social media about the safety of customer funds on the world’s largest crypto exchange. In order to defuse the allegations and ensure the trust of its users, the company had commissioned the audit company Mazars. Mazar’s “Proof of Reserve” report was intended to reassure clients that the funds are held in exchange accounts and not loaned out as in the case of FTX.
Although the report is fundamentally positive, it also raises some doubts. The Wall Street Journal pointed out that there are $245 million in unsecured liabilities tied to Bitcoin. However, according to Bloomberg, the exchange currently has total reserves of $75 billion, half of which is in BUSD and the native token BNB.
Binance is also facing money laundering allegations. According to Reuters, the crypto exchange is accused of money laundering over $10 billion. Although CZ denies the allegations, they are certainly not helping investor confidence at this time.
Does CZ drive in the reserve?
Mazars surprisingly halted work on “reserve proof” reporting on Friday — for all clients in the crypto space. According to the Financial Times, French society seems to be concerned about the public impact of such reports.
This immediately led to an increase in withdrawals of funds from users of the leading crypto exchange. However, CZ ensures that all payment requests can be processed at any time, as 100% of client funds are held. He also describes the situation as “business-as-usual” and sees it as a welcome stress test.
Who Should Review the Largest Crypto Exchange?
According to Binance, the so-called “Big Four” auditing firms are unwilling to perform proof of reserves with the largest exchange. These include Deloitte, Ernst&Young, KPMG and PwC – who have yet to comment.
After ex-FTX reviewer Armanino had already announced that he would no longer be conducting reviews, there weren’t many options left. Deloitte is probably at an impasse because it was already acting as an auditor for competitor Coinbase.
“We have contacted a number of large companies – so far without success,” a Binance spokesperson told Blockworks. According to this, the exchange intends to release more details about the secured assets in the near future.
Blockchain without Binance?
Of course, no one can predict what the future holds for the volatile crypto market. Right now, however, it looks like the world’s largest crypto exchange has a good chance of weathering the crisis. Even if it means bumpy times, if successful, then the CZ exchange could emerge stronger and expand and maintain its leading position in the crypto space.
The price of BNB has also fallen disproportionately by 12% in the past seven days – even at $230 for a short time. Despite all the price swings and uncertainties, BNB still ranks fifth with a market capitalization of around $40 billion. The exchange’s $6 billion 24-hour trading volume is also far ahead of its competitors.
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