Binance Reportedly Used User Funds For Its Own Undisclosed Purposes

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According to Forbes, Binance is accused of misusing customer assets for its own use in a sequence of actions similar to those that caused FTX to fail.

The largest cryptocurrency exchange in the world reportedly moved $1.8 billion in stablecoin collateral to a hedge fund, which then ripped off its investors, according to Forbes, which examined on-chain data from August 17 to early December. The trading division of FTX, Alameda Research, is one of these investing businesses.

This basically indicates that despite Binance’s promises to the contrary, more than $1 billion in B-peg USDC cryptocurrency was left uncollateralized, according to the report.

“Binance has never traded or otherwise invested user assets without consent under the terms of specific products,” a spokesperson for the company said. “Binance holds all of its customers’ assets in segregated accounts that are identified separately from any accounts used to hold assets belonging to Binance.”

The shift in value may not be unlawful in the mostly unregulated market of cryptocurrencies, but it may cause investors some discomfort.

After reportedly manipulating the crypto exchange’s deposits to run operations at sibling trading business Alameda, Sam Bankman-Fried’s FTX lost more than $8 billion in customer money.

A representative for Binance clarified that the blockchain information mentioned in the article relates to “internal wallet administration” and is unrelated to the collateralization of consumer assets.

“While Binance has previously acknowledged that the wallet management process for token collateral linked to Binance has not always been flawless, at no time was the collateralization of User Assets affected,” the spokesperson said. “Procedures for managing our collateralized wallet have been settled on a long-term basis and are verifiable on-chain.”

It’s not the first time Binance’s business methods have been criticized.

Earlier this month, Reuters published a report alleging that Binance had unauthorized access to the bank account of a separate American partner. The business reportedly transferred $400 million from the account to a trading company run by Changpeng Zhao, the CEO of Binance.

The biggest cryptocurrency exchange in the world has also been the subject of several legal and regulatory inquiries, including inquiries from the SEC and the Department of Justice.

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