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husband.
The Binance audit is what the inverted comma was so intended to be and no longer exists. Mazar’s, an auditing firm that worked with Binance to produce a report on proof of reserves that Mazar’s was referring to, not an audit, has removed that report from his website.
They also announced that they are suspending work on all crypto clients. Not just Binance, but also Crypto.com and KuCoin.
A Binance spokesperson said: Unfortunately, this means we cannot work with Mazar for the time being.
I have written extensively about the evidence failures of reserve initiatives. In short, a report asks more questions than it answers, and is therefore in no way inferior to an audit.
Most notably, he refused to present the debt. CEO Changpeng Zhao said on his Twitter that it is more difficult to simply ask around to make sure Binance does not owe anyone.
Yes, but debt is harder. We are not in debt to anyone. you can ask around.
CZ Binance (@cz_binance) December 7, 2022
Needless to say, he quickly deleted the tweet, filed for bankruptcy and was arrested this week, shortly after being told by FTX CEO Sam Bankman-Fried that “the assets are fine.” .
Binance currently has nothing to do with FTX, but the PTSD investors have over the collapse of FTX is currently fueling a very sensitive market.
Then the very timing that US prosecutors are reportedly considering criminal charges against Zhao and other Binance executives in connection with years of ongoing money laundering cases. The good news has come and Binance has suddenly become the number one news story.
After that, withdrawals from Binance flooded in.
In addition to this, the BNB token has held up well through 2022, at least compared to other crypto markets.
Canceling Mazar’s report doesn’t really change much. The need for more transparency is now widely recognized in the field. Binance and other exchanges operate in a more opaque manner than traditional financial companies.
It’s an ironic truth, and in an industry meant to be built on the premise of dishonesty, investors have to rely on executive assurances on Twitter. Hopefully, the ruckus this episode caused will bring Binance all the way clean to present a bona fide audit to the world.
There’s certainly nothing to suggest the company has any reason not to, but for paranoid investors the opposite is also true.How to make sure Binance is true to their word is currently There is none.
Mazar’s has declared Binance to be 101% collateralized.
At the time of the evaluation, Mazars confirmed that assets within Binances control accounted for over 100% of the platforms total liabilities. the report said.
Audit proof of reserves. transparency. #binance https://t.co/IClZxTYaWp
CZ Binance (@cz_binance) December 7, 2022
However, upon closer inspection, the data were less than satisfactory. Binance had assets of 582,486 BTC and liabilities of 597,602 BTC. This seemed to suggest a 3% undercollateralization for him, but including assets lent to clients through loans and margin accounts brought the collateralization rate to 101%.
While it seems to have calmed down recently with withdrawals from Binance returning to normal levels, this episode sums up the transparency issue with cryptocurrencies.
It’s great that Binance survived this little “stress test”, but really, this shouldn’t have happened in the first place. However, until cryptocurrency companies make disclosures consistent with those presented in traditional finance, these horror episodes will continue to emerge over time.
Meanwhile, Binance has confirmed that it is moving in the direction of increasing transparency. It’s great and something the space desperately needs.
