Forbes magazine is once again unabashedly investigating the on-chain activities of crypto exchange Binance, comparing it even to FTX.
Forbes vs Binance: accusations against the crypto exchange and the ghost of FTX
The accusation made by Forbes against Binance is serious, as it claims that the exchange carried out a “front maneuver” by transferring a large amount of stablecoins to hedge funds.
The article, published on the Forbes website, states that Binance transferred $1.78 billion in B-peg USDC to various hedge funds.
According to Forbes, this move was made without the knowledge of the exchange’s users, and it is unclear whether the transfer benefited the exchange or the hedge funds.
Hence, the magazine made allegations regarding the transfer of $1.78 billion in B-peg USDC to various hedge funds.
According to the article, Binance completely emptied its B-peg USDC collateral without reducing the supply. This means that Binance transferred the entire amount of USDC held as collateral for stablecoin without reducing the supply of B-peg USDC.
This move by Binance raised questions about the exchange’s intentions and led to speculation about the impact of the transfer and the stability of stablecoin.
The article suggests that the transfer may have been made to bolster the value of the stablecoin or to manipulate the market.
Binance’s response to the allegations
The news launched by Forbes toward Binance was met with a strong response from the exchange. In a statement issued in response to the article, Binance denied the allegations and said that the transfer was made for the benefit of its users.
Furthermore, the exchange stated that it has always been transparent in its operations and has not engaged in any illegal activities.
Furthermore, Binance stated that the transfer of funds to the hedge funds was made with the full knowledge and consent of its users.
The exchange said the transfer was made as part of a program called “Binance Lending,” which allows users to earn interest on the cryptocurrencies they hold.
According to Binance, the program is completely voluntary and users can opt out of it at any time.
Binance’s response did not satisfy everyone, and there are still doubts about the exchange’s intentions.
Some experts pointed out that transferring such a large amount of stablecoins to hedge funds could have a significant impact on the market and could potentially lead to market manipulation.
The industry needs to be more transparent about its activities and be held accountable for any illegal or unethical practices, this is the message that was sent by Forbes.
B-USDC without collateral for about 4 months
The Forbes article also mentions the use of customer funds. The issue raised concerns about the financial stability of the exchange.
When Binance withdrew $1.78 billion USDC on 17 August, it did not decrease the supply of the B-USDC stablecoin. The collateral fell to zero and the exchange did not correct it for four months.
The lack of collateral for the stablecoin is a significant problem, as it casts doubt on the value of the stablecoin and Binance’s ability to honor its commitments to its customers.
The Forbes article also states that B-USDC was short more than $1 billion on three different occasions. This means that Binance did not have sufficient collateral to back the stablecoin and relied on other funds to support it.
Forbes believes that Binance is misusing customer funds, such as the FTX exchange that went bankrupt.
FTX was accused of using customer funds to finance its operations and eventually went bankrupt, leaving customers with a loss.
The accusation made by Forbes led to increased scrutiny of Binance and raised questions about regulatory oversight of the cryptocurrency industry. The lack of regulation and oversight in the industry has made it difficult for investors to make informed decisions and has also made it easy for bad actors to operate in the industry.
Right now Binance is under media attack, one of the most prominent finance magazines has raised questions about the exchange. CZ and his team will have to answer clearly for the allegations submitted by Forbes.
This is not the first time CEO Changpeng Zhao and Bianance have come under media pressure, and it probably will not be the last.