Binance CEO Changpeng Zhao defended the cryptocurrency exchange during an interview with CNBC’s Squawk Box, assuring that the exchange was financially sound.
The CEO added that the exchange does not owe anyone money and has never misused or co-mingled client funds that it handles.
Binance On Solid Ground
Binance CEO Changpeng Zhao made an appearance on CNBC’s Squawk Box and spoke at length about FTX, audits, the recent withdrawals on the exchange, and the $2.1 billion SBF buyout. He was also grilled about the recent pause in withdrawals, an unexpected move by the cryptocurrency exchange as it faced a surge in withdrawals, and about the exchange’s solvency.
Binance had temporarily halted withdrawals of the USDC stablecoin because of inadequate USDC reserves on the platform. Zhao stated that the problem was nothing major and was related to a New York bank the exchange uses to swap its Paxos-issued BUSD stablecoin into USDC, which was shut at the time. As a result, withdrawal requests could not be processed, but resumed shortly after..
“We have the assets to convert. There’s no margin; there’s no leverage. We just needed the banks to open. When banks are closed, and you try to withdraw money, it doesn’t work.”
Zhao also added that the exchange does not owe anyone money, has no outstanding loans, and has no venture capital investments. He added that the exchange was coping with customer withdrawal demand, stressing that no amount of withdrawals could strain the exchange’s functioning.
What About The FTX Clawback?
Zhao also dismissed concerns that Binance may have $2.1 billion clawed back as a result of the FTX exchange’s bankruptcy proceedings, stating that he trusted the company’s lawyers to handle those proceedings. Binance had gotten the $2.1 billion payment from FTX when it exited its position in the exchange in 2019. There is speculation that the exchange may be asked to return this amount to bankruptcy trustees who may look to claw back any fraudulent conveyances made by FTX.
When pressed further, Zhao stated,
“I think we’ll leave that to the lawyers. I think our legal team is perfectly capable of handling it.”
Big Four Audit?
The CNBC team also pressed Zhao on the matter of an independent audit by any of the reputable “Big Four” accounting firms and why Binance had not done that yet. Zhao responded by admitting that they have not been in talks with the Big Four firm. However, he added that a lot of the more reputable auditing companies are hesitant to work with crypto businesses and exchanges because of the FTX debacle.
He also added that most auditing companies could not audit crypto businesses properly, but he is willing to work with competent auditors. He also defended Binance’s EARN program, stating that funds used there are for other margin traders to borrow from.
“Sometimes we do run out because the demand supply sometimes doesn’t match up, but the money never leaves the platform, and we do margin controls.”
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.