Binance Reserves Report Dissected as Exchange Quells Concerns

Mainstream media has been on a crypto frenzy this year following several high-profile company takedowns. The Wall Street Journal has been at the forefront of some of these attacks.

The latest attempt to mock the crypto industry has taken a swipe at Binance and its recently released proof of reserves.

Over the weekend, the outlet reported that it had consulted with accounting experts who said “investors should still not be happy with the report.”

Over the past month, Binance has released data on its crypto wallet holdings, as reported by The crypto potato. Furthermore, the firm claimed that deposits were supported 101%.

Binance reserves picked apart

According to an accounting professor at Baruch College in New York, Douglas Carmichael, the report from the auditing firm Mazars last week lacks information.

The WSJ also wondered about a Bitcoin price anomaly that it claimed would make Binance reserves 97% secured, not 101% as the firm claimed.

Binance spokeswoman Jessica Jung told the outlet that the difference of 21,860 BTC “consisted of BTC loans made to customers through the Binance Loan Program,” adding that “the collateral for said loans is not in BTC, but in other currencies.”

The audit report did not describe any of Binance’s internal controls or systems for liquidating assets to cover leveraged loans, according to other accounting experts. Former Financial Accounting Standards board member Hal Schroeder commented:

“And we know that in the United States, even with all the good systems, the banks have occasionally been caught off guard. In light of what we’ve seen in the Bahamas, I wouldn’t conclude that all the systems are that good.”

The audit also failed to reveal the name of Binance’s ultimate parent company, but confirmed that Changpeng Zhao was the majority owner.

In its defense, Binance has a hefty “secure asset fund for users” (SAFU) which it recently topped up to $1 billion.

Dodgy Trading Discovered

On December 11, Wu Blockchain reported some suspicious trading patterns on Binance. It added that the activity may have been related to stolen API keys from 3commas.

Binance CEO Changpeng Zhao responded with the assurance that “this appears to be just market behavior.”

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