Binance CEO hits back at Forbes report, calls it ‘baseless’

Binance CEO, Changpeng Zhao, has refuted claims by Forbes, accusing the exchange of ‘shuffling’ $1.8 billion in stablecoin collateral to numerous hedge funds.

Binance has been in the limelight since Forbes published a story claiming that the exchange transferred $1.8 billion in collateral to hedge funds without informing its customers. The article drew parallels between Binance and defunct exchange FTX in the lead-up to its collapse.

CZ took to Twitter stating that Forbes needed to understand how an exchange works and users can withdraw their assets anytime.

According to CZ, the movement of funds was part of a backroom maneuver. Binance transferred the stablecoin collateral to hedge funds such as Tron, Amber Group, and Alameda Research between August and December 2022.

CZ also disputed several assertions presented by Forbes, including Binance US’s recent unsuccessful Voyager bid and the US Securities and Exchange Commission’s (SEC) anticipated legal action against Paxos Trust Corporation, the bearer of the Binance-branded stablecoin, Binance USD.

CZ pointed out that Binance and FTX are different and that Binance had processed billions in withdrawals in December 2022. 

At the time, Binance recorded unprecedented outflows from its reserves, processing $6.6 billion in withdrawals over seven days.

CZ further highlighted that Binance implemented Ethereum co-founder Vitalik Buterin’s suggestion for exchanges to introduce a proof-of-reserves using the zero-knowledge approach.

The Forbes article also brought up CZ’s Chinese nationality. CZ has also stated that he is a Canadian citizen.

The article comes after the New York Department of Financial Services ordered Paxos Trust to terminate its issuance of BUSD.

Paxos Trust officially announced that it would no longer be minting the stablecoins while giving them a redemption period until February 2024. According to Binance, it continues to back the BUSD and is now researching non-USD stablecoins.

The exchange has processed billions in withdrawals and has implemented a proof-of-reserves using the zero-knowledge approach. Binance still supports Binance USD despite the recent termination of its issuance by Paxos Trust.