By Geoffrey Smith
Investing.com — Confidence in Binance appears to be waning.
The world’s largest cryptocurrency exchange said it was suspending withdrawals from overnight as customers withdrew more than $2 billion from it in less than 36 hours after the exchange’s latest efforts to prove its financial strength have fallen flat.
Customer concerns were also fueled by a Reuters report on Monday indicating that several senior US Department of Justice officials are ready to file charges against the exchange in a long-running investigation into suspicions of help money launderers. The founder of the exchange, Changpeng Zhao, has repeatedly denied these suspicions.
USD Coin, one of the largest stablecoins in the world, usually acts as a bridge between the world of cryptocurrencies and that of fiat currencies. As such, redemptions are often the result of investors exiting the crypto space altogether, while demand for USDC generally reflects demand for digital assets in general.
Zhao had attributed the suspension of USDC withdrawals to a technical bottleneck governing transactions from two other stablecoins, and . The latter, jointly issued by the exchange and New York-based crypto infrastructure Paxos, is a stablecoin used by Binance customers primarily to funnel funds between other less liquid tokens and investments on its platform.
“Channel to exchange PAX/BUSD to USDC requires going through a bank in NY for USD. Banks won’t open for a few more hours. We believe will be back to normal when banks open,” tweeted Zhao during the European morning. He played down any suggestion that Binance itself would be unable to meet withdrawal requests.
“These are 1:1 conversions, no margin or leverage,” Zhao tweeted. “We will also try to establish smoother swap channels in the future. In the meantime, feel free to remove any other stablecoins, BUSD, USDT, etc.”
Binance, a centralized exchange like its rival FTX, has been under pressure to prove the quality of its own reserves since it triggered FTX’s collapse by withdrawing more than $2 billion in funding. Last week, it released a “proof of reserves” document from global tax and auditing firm Mazars, which apparently showed it had enough assets to cover client deposits. However, Mazars made it very clear that he only reviewed what Binance asked him to review, and refrained from giving his own stamp of approval to the results.
“We do not express an opinion or conclusion of assurance,” Mazars said. “Had we performed additional procedures, other matters may have come to our attention and been flagged.”
The report had drawn criticism from users and industry experts.
“Binance’s ‘proof of reserve’ report does not address the effectiveness of internal financial controls, does not express an opinion or conclusion of assurance, and does not endorse the numbers,” the statement said. former SEC official John Reed Stark via Twitter (NYSE:). “That’s how I define ‘red flag’.”
Source link -95