After a report said Binance misplaced ~$1.8B in USDC, Binance offered confused and sometimes contradictory responses, continuing its petulant and defensive tone
This CoinDesk column lands three months after Reuters' analysis showing Binance's corporate filings across 14 jurisdictions are mostly opaque — no disclosed headquarters for Binance.com, minimal operational data. Against that backdrop, the exchange's confused, shifting responses to a report that it misplaced roughly $1.78B in USDC read less like a one-off stumble and more like confirmation of the pattern.
David Z. Morris's framing — that the 'FUD' is self-generated — captures why this matters beyond the disputed number: an exchange that cannot give a consistent account of customer assets invites exactly the scrutiny it says it fears. Within months, the SEC's suit against Binance and Changpeng Zhao would allege precisely the kind of asset mishandling this episode gestured toward, even as a Binance executive told the FT the company would do 'everything we possibly can' to be regulated.
First-order effects
USDC holders and Binance customers get no reliable reconciliation of the reported $1.8B gap, because the company's contradictory statements leave both the size and the cause of the shortfall unresolved.
Second-order effects
Regulators already skeptical after the opacity findings now have a concrete incident to cite; the SEC's subsequent case against Binance and Zhao over redirected customer funds shows how quickly defensive messaging converts into legal exposure.
Third-order effects
If exchanges cannot demonstrate custody discipline voluntarily, transparency shifts from marketing to mandate — proof-of-assets disclosures become the price of operating in regulated markets, and opaque structures become disqualifying rather than merely criticized.
The trend: Major crypto exchanges are discovering that opacity is a compounding liability: each unexplained asset discrepancy tightens regulator and counterparty demands for verifiable proof of customer holdings.
I am reluctantly spending time on FUD again (4). Forbes wrote another FUD article with lots of accusatory questions, with negative spins, intentionally misconstruing facts. They referred to some old blockchain transactions that our clients have done. 1/9
BREAKING: Binance used customer deposits for its own undisclosed purposes, according to a report from Forbes. Binance transferred $1.8 billion in stablecoin collateral to hedge funds, the report says.
They called out Tron, Amber group, Alameda Research, etc. They seem to not understand the basics of how an exchange works. Our users are free to withdraw their assets any time they want. Their withdrawals are turned into “received hundreds of millions of shifted collateral.” 2/
BiNaNcE is SaFu. cZ iS GrEaT. All coins off of all exchanges. If your crypto isn't in your custody, you will get destroyed every time. https://twitter.com/...
It's funny to me that to this day, not one regulator has brought up the serious & credible allegations against FTX including fraud, counterfeiting, sabotage, & extortion committed against projects including $AXS, $CSPR, $NUC, $REEF, $CEL, $ICP & others. https://twitter.com/...
This is just my opinion. It's clear that #Binance is being targeted, looks like the government wants an exchange that they can control, and also an exchange that didn't “mess” with their plans. Their first option was FTX, and we all know how that went https://twitter.com/...
11) So if the funds were not withdrawals what were they? This is where more information and skepticism of the official story are needed. Were they loans, where they loan payments, ... we don't know but the exchange's explanations don't up.
5) The next transactions are the transactions recorded on the Ethereum ledger - the meat - showing how Binance emptied a wallet that was supposed to keep b-token collateral Here, $1.85bn in BUSD goes from the Binance peg wallet to cold wallet Binance 8 https://etherscan.io/...
12) One thing is certain: Binance promised to keep 100% collateral to b-token investors and chain data show how it broke that claim One may say the exchange had a lot of USDC laying around to serve the withdrawal/transfer, but Glassnode shows differently https://twitter.com/...
#Binance & CZ claim the Forbes interpretation of chain data in Aug 2022 is wrong and that clients were simply withdrawing funds. Let's start there, give others specific data and conclude what they will. https://www.binance.com/...
Binance rehypothecated user funds. $1.8 billion of USDC that collateralized B-USDC tokens was liquidated and shuffled to various counterparties, then quietly replaced over several months. “Funds are SAFU” has been a red herring all along, in case that wasn't already clear. https:…
Binance has stood the test of time, with users safely withdrawing billions of dollars in December. I was hanging out socially with crypto friends visiting Dubai everyday that week, including @jgarzik, @brucefenton, @MatthewRoszak, @PatrickByrne 5/ https://twitter.com/...
Yeahhhhh not great. Between BUSD, ‘accounting issues with pegged assets’, weird market making entities, large unsourced payments to their US entity, and now this, we're finding out Binance has a worryingly similar playbook to FTX. https://twitter.com/...
This is an interesting group working with Binance on moving stablecoins: Cumberland, a powerful market-maker that tends to avoid press; SBF's Alameda Research; Hong Kong-based Amber Group (whose CEO recently died); and everyone's favorite diplomat, His Excellency Justin Sun. http…
Good breakdown of recent Binance inconsistency from @davidzmorris. Also a reminder that I covered this issue twice before Forbes, including a detailed breakdown of what happened to $750m of the Binance-peg USDC reserves https://www.coindesk.com/... https://fortune.com/...
Last week, I reported how Binance moved $750m of customer reserves for its Binance-peg USDC token and converted it to BUSD. Today, @Steven_Ehrlich and @eltrade seem to have found the destination for the other $1bn moved out of the reserve wallet: https://www.forbes.com/...
“The implication of Hillmann's comments is that despite what balances may show in Binance's publicly viewable exchange wallets, the firm has its own set of proprietary records to keep track of funds.” New investigation from @eltrade and @Steven_Ehrlich: https://www.forbes.com/..…
#Binance * Commingled user $ going back to 2020, but possibly earlier * it took $3.6B in collateral $ and didn' t return $1B * it backstabbed its loyal B-token users to help hedge fund * it keeps separate ledger of transactions https://www.forbes.com/...