- Changpeng Zhao responded to Forbes’ claims related to Binance’s financial status that has been called into question lately.
“They don’t know how an exchange works,” said Changpeng “CZ” Zhao, CEO and co-founder of Binance. Via his Twitter account, Zhao rejected claims made by Forbes on Monday in an article published about Binance’s recent fund reorganization following FTX’s mega-collapse.
“When you’re the world’s largest crypto exchange in a largely unregulated market, it’s easy to make up the rules as you go along,” Forbes wrote.
“In its latest backroom maneuver, Binance transferred USD 1800 million in stablecoin collateral to hedge funds, including Alameda and Cumberland/DRW, leaving its other investors exposed,” in the middle of last year, the publication added.
Zhao’s response came Tuesday in a tweet in which the CEO labeled the Forbes article “FUD” (fear, uncertainty and doubt). Lately, the cryptocurrency exchange has been under heavy regulatory pressure along with the rest of the crypto market.
“They don’t seem to understand the basics of how an exchange works. Our users are free to withdraw their assets whenever they want,” Zhao said referring to the content of the Forbes article.
Through a series of tweets, Binance’s CEO wanted to explain the content of the article and reject the claims about the current reality of the Cayman Islands and Seychelles-based cryptocurrency exchange platform.
“They called out Tron, Amber Group, Alameda Research, etc. They don’t seem to understand the basics of how an exchange works,” Zhao wrote. He added, “Our users are free to withdraw their assets whenever they want. Their withdrawals become “hundreds of millions received from transferred collateral.”
Forbes compares Binance’s moves to FTX
In the wake of the bizarre fund movement, the article compared Binance to FTX before the Sam Bankman-Fried cryptocurrency exchange’s administrative scandal that Zhao himself helped bury with his comments the day before was uncovered.
The article also addresses Binance.US’s recent takeover bid for Voyager, as well as the planned legal action launched by the U.S. Securities and Exchange Commission (SEC) against Paxos Trust Company, the issuer of Binance’s stablecoin, Binance USD.
Forbes announced a year ago that Binance would make the acquisition of a $200 million stake in the company as a strategic investment. But, in June of the same year CZ told Bloomberg that the investment in the media company was “changing.”
That came just after Forbes’ attempt to go public failed. After that episode, nothing more has been heard about the issue. However, in response to a Twitter user who suggested buying Forbes to “take it down” CZ responded, “it’s not worth it.”
The standoff with Circle
Binance has had a tense start to the year in the wake of scrutiny of the exchange by U.S. regulators and its own competitors. The Forbes article follows the order issued by the New York Department of Financial Services (NYDFS) against Paxos Trust Company to cancel the issuance of BUSD.
The blockchain company officially announced on February 13, that it had given up on issuing stablecoins so it was offering a redemption period until February next year. For its part, Binance is still issuing BUSD and is looking for new stablecoins other than USD.
In mid-February Circle, the issuer of the stablecoin USD Coin (USDC) alerted U.S. regulators to Binance’s situation and its handling of its stablecoin.
Binance’s rival company and its stablecoin reportedly informed authorities about irregularities in the cryptocurrency exchange’s stablecoin holdings.
According to a Bloomberg report, Circle alerted regulators in 2022 that Binance did not possess sufficient reserves to support the issuance of BUSD tokens, which the platform was issuing through Paxos. Then came the NYDFS move.
Earlier, Binance had decided to expel USDC from the basket of stable coins offered by the platform. The exchange was trying to eliminate its competitors by pushing its own BUSD cryptocurrency.
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