Key takeaways:
- Binance’s books are a black box, documents show, as it attempts to summon customer faith.
- The US Justice Department is investigating the company for potential money laundering and sanctions infringements.
Binance, the largest cryptocurrency exchange in the world, is attempting to regain credibility amid a boom in customer withdrawals and a precipitous decrease in the value of its digital coin. Binance’s cryptocurrency token has reportedly fallen 6% in the last day due to investor fears.
The native cryptocurrency of Binance, BNB, also dropped 15% during the previous week and hit its lowest level since July, according to CNBC on Monday (Dec. 9)
The exchange claimed that due to its strong financial position and “we take our role as a custodian seriously,” it managed net outflows of over $6 billion over 72 hours last week without “breaking stride.”
In addition to Zhao’s role in FTX’s abrupt fall, it is crucial to discuss Binance’s current fiscal predicament.
The founder of Binance has gone so far as to chastise US federal officials, warning them that suspecting Binance of laundering money might destabilise the whole of crypto sector, in reaction to rumours that the US Department of Justice was preparing to start charging Binance with illegal money transfers and colluding to launder money.
Changpeng Zhao, the founder of Binance, claimed his organization would “lead by example” in adopting openness following the demise of competitor exchange FTX last month.
The core of the company, the massive Binance.com exchange that has handled trades worth over $22 trillion this year, is largely concealed from the public gaze, according to a Reuters review of Binance’s corporate papers.
According to the report, investors are worried about Binance’s ability to handle the claims arising from the bankruptcy proceedings, are dubious of statements made by executives of any company involved in the cryptocurrency industry, and have observed a sizable number of net redemptions from the Binance exchange.
The publication looked into documents made by Binance firms in more than a dozen jurisdictions, including Canada, Dubai, and states of the European Union, where the exchange claims to have “regulatory licences, certifications, authorizations, and approvals.”
Unlike its American competitor Coinbase, which is registered on the Nasdaq, Binance is not obligated to release comprehensive financial information because it is not a publicly traded corporation. Industry records also suggest that Binance hasn’t raised outside funding since 2018, so it isn’t now required to disclose financial details to outside investors.
The study of the filings for the units, according to Binance Chief Strategy Officer Patrick Hillmann, was “categorically wrong.” He stated in a statement to Reuters that “the amount of business and financial information that has to be given to regulators in those markets is huge, typically requiring a six-month-long disclosure process.”
These neighbourhood firms, according to former regulators and officials from Finance, are merely window decoration for the major uncontrolled market.
