The investigation against Binance is ongoing. This leads to the question: should I withdraw my Bitcoin (BTC) and other cryptocurrencies from the crypto exchange? A careful examination of the current facts can help to better assess the situation.
Binance: the most important things in a nutshell
- US prosecutors are considering indicting Binance for alleged money laundering and sanctions violations.
- While the parent company claims the US subsidiary is a completely independent entity, reports suggest this is a front.
- Binance CEO Changpeng “CZ” Zhao recently claimed that there would never be a payment issue, which seems untrue.
- The experience of the FTX crypto exchange leads to uncertainty among investors and the question of whether to withdraw their coins from the exchange.
Should it be confirmed that the ties between the parent company and the US branch are indeed as close as currently suspected, this could have legal consequences. It cannot be ruled out that a bank run may follow and that the Bitcoin exchange will experience payment difficulties, at least temporarily. In fact, it currently appears that the ties between the parent company and the US subsidiary are closer than is publicly claimed.
Is Binance.US really independent?
As early as October 2020, a leaked document suggested that Binance deliberately set up trading structures to circumvent US regulations. According to a report by Forbes, as early as 2018, the Bitcoin exchange planned to implement a trading line that would comply with US laws.
However, as the report suggests, the creation of this arm of the company should have been much more misleading for regulators. Binance reacted quickly with a libel suit against Forbes, but withdrew it soon after. Meanwhile, the waves between Forbes and Binance seem to have smoothed out. Finally, Binance invested $200 million in the business magazine in February this year.
However, the problem persists. Binance boss Changpeng Zhao publicly claims that Binance.US is an independent entity from the parent company. But a Reuters report from October this year also suggests that’s not the truth. On the contrary, Reuters notes, among other things, a personal connection between the American branch and the parent company.
Dirtybubblemedia’s research also confirms this at the blockchain level. As the magazine notes, assets are supposed to move from offshore wallets to Binance-US and vice versa. In Brief: According to Dirtybubblemedia, the Bitcoin exchange’s parent company uses customer funds to help the US branch – and vice versa.
Withdrawal incidents
As the magazine reports, there were pauses in stablecoin withdrawals on US.Binance on December 17. Apparently, it is suspected, Binance did not have enough funds, at least in the short term, to pay its customers. Considering Binance’s CEO was adamant last week that the bitcoin exchange still has enough funds to pay its customers, that’s not news to expect from the biggest. cryptocurrency exchange the world wants.
After a liquidity injection of nine million USDT, the US branch of the exchange was liquid again. However, as Dirtybubblemedia suggests, these nine million USDT would have been funds sent directly from wallets belonging to the parent company.
In an analysis of the funds, the magazine finally hints that this is a wallet that has transferred a total of US$1.4 billion from the parent company to Binance.US since July 2020.
Should I be worried about my bitcoin?
It is becoming clear that Binance’s external communication is deviating from the status quo. The close ties between the US branch and the parent company in particular could lead to difficulties for the company in the future.
Possible investigations by the US prosecutor’s office could also put additional pressure on the stock market. This in turn can lead to uncertainty in the market and, in the worst case, lead to a strong stock market run. It remains to be seen whether Binance can then resist it.
Anyone who has concerns about storing their Bitcoin or other coins on the exchange is advised to move them to an external wallet. Ideally, this is a hardware wallet, nothing can happen to it. Because in case of doubt, you are at a disadvantage in the event of failure of the centralized suppliers.
However, before you get carried away with panic selling, one thing needs to be mentioned: the value proposition behind Bitcoin has not changed. The blockchain continues to stick block by block. Exchanges or not.
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