Binance CEO, Changpeng Zhao (CZ), called out Forbes’ latest FUD article that raised questions about the exchange’s alleged collusion with other companies in “shifting collateral.” In a tweet thread on Monday, CZ accused Forbes of intentionally misconstruing facts, using negative spins, and building a false narrative. According to CZ, Forbes’ article is purely a FUD-spreading article. Considering all of the uncertainty in the market right now, such an article harms the industry.
Forbes’ article claimed that Binance and other companies, including Tron, Amber Group, and Alameda Research, engaged in a practice known as “collateral shifting.” This practice means companies moving client funds between accounts to give the impression of higher asset holdings. According to Forbes, this practice could inflate asset prices and create false liquidity. If this was to be true, Binance, Tron, and Amber Group would be as guilty as FTX and Alameda Research.
CZ dismissed Forbes’ allegations as baseless and misinformed, saying that they did not understand the basics of how an exchange worked. CZ emphasized that Binance’s users were free to withdraw their assets at any time, and their withdrawals were easily traceable on the blockchain. He also noted that users had to deposit funds on Binance first before they could withdraw, and those deposit transactions were conveniently ignored in Forbes’ article.
CZ Binance Rightfully Claims Binance is Different From Other Exchanges
He went on to stress that Binance was different from other exchanges. Considering that Binance has survived for several years while being under constant “attacks,” CZ claims that the company stood the test of time. To counter the claims, Zhao also mentioned the recent stress test and the rapid withdrawals that took place in December that accounted for billions of dollars. It is a known fact that Binance was one of the main reasons why most exchanges today have proof-of-reserves. He goes on to say that they are using a new zero-knowledge approach suggested by Vitalik Buterin. This approach is meant to protect users’ security and privacy. The system allowed Binance to prove that it held enough assets to back up its users’ balances without revealing the actual amounts.
Forbes Targeted Tron, Binance, and Amber Group
Forbes has yet to respond to CZ and we doubt that it will ever respond. However, though, their article has raised concerns among some investors and regulators. One can say that “they fell for the trap,” understanding that the crypto industry is still healthy and that article presents a false narrative. CZ Binance has been no stranger to FUD and criticism, with many questioning their business practices and regulatory compliance. However, Binance has consistently maintained its commitment to transparency, security, and user experience. This has helped it weather the storms of negative publicity as a stronger entity.
As the crypto industry continues to evolve and mature, exchanges like Binance will play a crucial role in shaping its future. Again, most of us know the efforts of Changpeng Zhao in shaping a positive future for crypto and Bitcoin specifically. Through cooperation and transparency, they can achieve their vision of a more accessible and equitable financial system.