Forbes recently published a piece titled “Binance’s Asset Shuffling Eerily Similar To FTX Maneuvers,” which focused on the cryptocurrency exchange Binance’s recent “shuffling” of funds. The article compared Binance and its recent activities to the collapse of FTX where Binance had an important part to play.
The fall of FTX occurred during a 10-day period in November 2022. The downfall of FTX shocked the volatile cryptocurrency industry. Alameda Research, a crypto hedge firm founded by FTX creator Sam Bankman-Fried, held billions of dollars in FTX’s own cryptocurrency, FTT, and used it as collateral in more loans. Binance soon claimed it will “liquidate” its holdings in FTT tokens, causing a market panic. FTX experienced financial difficulty in November 2022 and sought rescue financing; rival exchange Binance explored buying portions of the firm but immediately backed down.
An investigation of Binance’s banking records and internal communications, according to a Feb. 16 Reuters report, revealed that more than $400 million was moved in a series of transactions in 2021 from an account managed by Binance.US to trading firm Merit Peak.
The article drew comparisons between Binance and the now-defunct FTX in the run-up to its downfall based on the transfer of money. It also mentioned Binance.US’s recent unsuccessful Voyager bid and the Securities and Exchange Commission’s anticipated legal action against Paxos Trust Company, the Binance-branded stablecoin, Binance USD issuer.
Nevertheless, the next day after the publication of the article, on February 28, Binance co-founder and CEO Changpeng Zhao came to Twitter to address the allegations. CZ countered many allegations from the Forbes piece in a series of tweets. Between August and December 2022, Binance transferred $1.8 billion in stablecoin collateral to hedge funds including Tron, Amber Group, and Alameda Research.
In response, the CEO said:
“They seem to not understand the basics of how an exchange works. Our users are free to withdraw their assets any time they want.”
In response to CZ and his thread, one Twitter user recommended he purchase Forbes and “delete it,” to which CZ replied, “not worth it.”
The Forbes piece comes after the New York Department of Financial Services (NYDFS) directed the blockchain firm Paxos Trust to stop issuing BUSD. On February 13, it formally declared that it will no longer be minting stablecoins and extended the redemption period until February 2024. Binance said it will continue to accept BUSD and is exploring non-USD stablecoins.
On February 10, 2022, Forbes revealed that Binance will make a $200 million strategic investment in the firm. Later in June, a follow-up report from Bloomsberg, CZ stated that the company’s investment arrangement is “changing” as a result of Forbes’ deal to go public failing. There hasn’t been any update on the issue since the story was published.
