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binance rejected February 27 The firm claims that its decision to transfer $1.8 billion of stablecoin collateral to hedge funds had some impact on user holdings.
In a statement provided to Forbes, Binance Chief Strategy Officer Patrick Hillman strongly implied that user funds were not being used for those purposes.
“There was no mingling” [Hillman said]because “there is the wallet, then there is the ledger”.
Hillman did not directly say whether the funds were transferred, and Forbes claimed that despite Hillman’s statement, Binance did not disclose the specific transfer.
In the same report, Forbes claimed that Binance has moved $1.8 billion of stablecoin collateral to a number of hedge funds, based on blockchain records.
In particular, Forbes accused Binance of transferring $1.1 billion to Cumberland DRW. The company supposedly helped Binance convert the funds into his Binance USD (BUSD).
Forbes also said Binance sent an unspecified amount to Alameda Research, a hedge fund closely linked to the FTX exchange failure. Forbes went on to call Binance’s actions “reminiscent” of his own mismanagement of FTX.
Forbes also named two entities, Amber Group and Tron, as recipients of collateral worth “millions of dollars” in the original report. Alameda, Amber Group and Tron received a combined $201 million, according to Forbes.
Presumably, the funds moved by Binance were meant to back the B-peg USDC stablecoin. Forbes calls these assets digital replicas of Circle’s USD Coin, or assets tied to the value of USDC so that they can be circulated on Binance’s own blockchain. If Forbes’ accusations are correct, users may have been left with under-collateralized stablecoins.
Binance has previously been the target of similar accusations. On Jan. 10, the company admitted that its B-pegged BUSD tokens were sometimes undercollateralized by as much as $1 billion. The company said at the time that it had improved its practices.
Binance’s stablecoin policy is in flux. Binance CEO Changpeng Zhao recently said that Binance will be less dependent, keep supporting BUSD that has finished issuing. The exchange announced in September that it would scale back support for stablecoins other than Tether.
