Towards the end of 2022, the market saw FUD (Fear, Uncertainty, Doubt) surrounding the safety and security of Binance, one of the world’s largest and most popular cryptocurrency exchanges.
Concerns stemmed from various sources, including social media posts and online articles, that raised concerns about the exchange’s security and the potential for users’ funds to be at risk.
Let’s take a closer look at these recent concerns and examine the released audit report to explain why FUD is no cause for concern and why Binance is safe.
Summary of concerns
One of the concerns surrounding Binance is a series of social media posts and online articles claiming that the exchange is unsafe and users’ funds are at risk.
These claims are fueled by a variety of factors, including the Celcius bankruptcy, the high-profile FTX bankruptcy, a temporary suspension of withdrawals, and the recent spike in phishing attacks targeting cryptocurrency exchanges. .
Despite these concerns, it is important to note that Binance has a long track record of security and takes many steps to ensure the safety of users’ funds. We store most of our users’ funds in offline cold storage wallets that are not connected to the internet, making them much less vulnerable to hacking attacks.
Additionally, Binance implements several other security measures, including multi-factor authentication, to protect user funds. Below, I’ll elaborate on some of the concerns.
After the collapse of multiple platforms in 2022, the public has become interested in checking exchange margins to determine if there is a 1:1 backing for listed assets. rice field. In December 2022, Binance was audited by financial auditor Mazars and a report showed that Binance’s Bitcoin (BTC) reserves exceeded 100%.
However, there were still some concerns as the platform’s liability was not included.Kraken’s former CEO Jesse Powell criticized the audit in November, saying it was insufficient unless it covered negative balances. claimed to be. His CEO of Binance, Chenpang Zhao (CZ), later confirmed that the exchange will have no outstanding loans in December 2022.
Suspension of USDC withdrawals
On December 13th, 2022, Binance temporarily suspended the withdrawal of USD Coin (USDC) tokens on its platform. The move raised investor concerns as Celcius suspended withdrawals shortly before his July 2022 bankruptcy. Additionally, BlockFi also stopped withdrawals before bankruptcy, with a bankruptcy hearing in early January 2023.
However, according to an announcement on Twitter, withdrawals on Binance have been suspended due to a token swap involving USDC.
In this case, the timing appears to have been bad, mainly due to the collapse of the popular FTX platform a month ago. Additionally, withdrawals of the Tether (USDT) and Binance Coin (BNB) stablecoins were not restricted during this time. Binance was also able to withstand a surge in user withdrawals.
On the same day that USDC withdrawals were suspended, up to $2 billion in Ethereum tokens were withdrawn from the platform within 24 hours. Chenpang Zhao (CZ) Welcomes Large Withdrawals,
“It is a good idea to stress test withdrawals for each CEX on a rotating basis.”
Cryptocurrency exchanges continue to weather large numbers of withdrawals, with Binance recently recording up to $12 billion in withdrawals in the last two months. Despite the high volume of withdrawals, Binance continues to operate as normal.
Another source of FUD surrounding Binance is the surge in phishing attacks targeting all top exchanges. Phishing attacks are a standard tactic used by hackers to impersonate legitimate companies and individuals to trick them out of login credentials and other sensitive information.
In the case of Binance, hackers set fake appwebsites, or social media accounts claim to be affiliated with exchanges and use them to trick users into providing their login credentials.
While it is true that phishing attacks can pose a significant risk to online services, it is important to note that Binance has taken several measures to protect its users from such attacks. .
For example, the exchange implemented email and SMS verification for login attempts, set up a dedicated security team to monitor phishing attacks, and made some information public. Warnings and Guidelines Help users protect themselves.
at the end
Despite some recent concerns surrounding the safety and security of Binance, it is important to note that the exchange continues to operate as normal without incident.