Should we be worried about the future of Binance?

After the collapse of large exchanges such as FTX, followed by BlockFi, and the constant fall in the prices of cryptocurrencies, many are now watching Binance. However, the largest crypto exchange has already given a solvency verdict.

The collapse of FTX and later that of the BlockFi cryptocurrency trading platform after declaring bankruptcy, has left the crypto market at rock bottom. FTX was the second largest cryptocurrency exchange by trading volume at the time, behind Binance and the whole episode surrounding this huge crash has cryptocurrencies shivering.

Due to events, Bitcoin , the top cryptocurrency, plummeted more than 10% to lows not seen since November 2020. After this type of decline in exchanges , actions such as fundraising, selling of participations and the formation of joint ventures in order not to fall into absolute bankruptcy.

This is why Binance CEO Changpeng “CZ” Zhao recently claimed that his exchange is creating a recovery fund to help rebuild the industry . Well, knowing all this, the auditing company Mazars has published a report on Binance ‘s Bitcoin reserves. The auditing company has reached the same conclusion as Binance itself and that is that it has enough Bitcoins to cover all user balances on the exchange. Mazars stated that “Binance was 101% collateralized.”

Mazars audit confirms 101% coverage of Binance in case of bankruptcy (although only Bitcoin is discussed)

And it is that,According to Investing, the exchange discovered that its users collectively owned 575,742.4228 BTC (9.7 billion current dollars) and that it has enough BTC and WBTC (Bitcoin-backed ERC-20 token) to cover 101% of these funds. He then contacted Mazars to verify this and it has been.

Binance already launched a test reserve website almost two weeks ago to reassure its users after the FTX collapse, so this audit only confirms that Binance has it all under control, according to Mazars.

Mind you, it has only focused on BTC , so if you have other cryptocurrencies , there is no proof-of-reserve system yet, although we hope that over time it will also focus on other big cryptos like Ethereum.

However, and despite all this, the concern does not stop lurking, knowing this, since users could also lose all the cryptocurrencies stored in their accounts. One striking fact is that if an exchange goes bankrupt, it can legally recover many of the withdrawals that its depositors made during the 90 days prior to bankruptcy.

And it is that, in these cases of madness in the cryptocurrency sector , the guaranteed creditors (funds, investors and financial institutions) will be the first to receive everything that is in the heritage. Once covered (difficult task), the rest is distributed among the unsecured creditors. This is where you and all your friends are. However, Binance reassures us for the moment.

Comments are closed.