Binance executives have given contradictory explanations after a Forbes report alleged the crypto exchange misused customer funds meant to back a wrapped version of USDC, says CoinDesk Chief Insights Columnist DavidZMorris Opinion for The Node newsletter
). This would have allowed Binance instead of Circle to collect the rising interest on instruments including U.S. Treasury bonds that back the stablecoins. This would be a perfectly rational business move, but could mean b-USDC was at points effectively backed by BUSD instead of USDC.Binance has firmly denied that anything like rehypothecation has occurred. However, the exchange at first offered misaligned explanations of what actually did happen.
Further complicating the picture, a Binance spokesperson on Tuesday wrote the following in a statement to CoinDesk, arguably contradicting elements of Hillmann’s claims to Forbes. "The on-chain transactions identified” by Forbes, the spokesperson continued, “relate to internal wallet management. While Binance has previously acknowledged that wallet management processes for Binance-pegged token collateral have not always been flawless, at no time was the collateralization of user assets affected. Processes for managing our collateral wallets have been fixed on a longer-term basis and this is verifiable on-chain."to push back against Forbes’ findings.
A more reasonable inference would be that the big transaction to Cumberland represents the on-chain reconciliation of a large number of customer moves over time, which would make it both a “rebalancing” and a “customer withdrawal.” But none of Binance’s responses explicitly make that claim.
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