CZ Binance on Audits, FTX, the $2.1 Billion SBF Buyout in 2021, and Recent Withdrawal Spree

by Gail Dunn

Changpeng Zhao – CEO Binance – agreed that the collapse of FTX has caused some panic in the space. He also reiterated that the fact that they were audited by a somewhat reputable firm caused others in that business to be more cautious when working with crypto businesses.

He assured that Binance is in good financial standing, does not owe anybody money, and has never co-mingled clients’ funds.

  • In a recent interview for CNBC, CZ said Binance coped with the recent customer withdrawal demand as per usual while reassuring that no amount of withdrawals could put a strain on the exchange.
  • This is because, unlike fractional reserve banking, Binance stores customer assets 1:1.

Talking live on @CNBC, @cz_binance :

Reiterates no amount of withdrawals can cause issues for @binance This is majorly different than fractional reserve banking, Binance holds assets 1:1. Confirms $USDC issue was from the bank-conversion channel and work hours👇

— CryptoPotato Official (@Crypto_Potato) December 15, 2022

  • During yesterday’s withdrawal spree, Binance temporarily halted USDC withdrawals, but the CEO explained that this was because they had to convert BUSD to USDC – a process that goes through a New York bank that, at the time, was not working. In a few hours, when the bank opened for business, the withdrawals were resumed.
  • CZ explained that they convert stablecoin deposits to BUSD – a stablecoin that’s issued by Paxos – a US-regulated financial services company.
  • The conversation also touched on Binance’s investment into FTX from a few years ago, which SBF had bought out in 2021. CZ said that at the time of the transfer, it was about $2.1 billion and a big chunk of it was in FTT tokens, “which are now worthless.”
  • When pressed on whether it would be a problem for Binance to write a check for $2.1 billion if that money was subjected to a clawback, CZ insisted that this is a matter for their legal team to resolve but reassured that Binance’s financials are in good standing.
  • The CNBC Squawk Box hosts also pressed on the matter of an independent audit by a “reputable” Big Four accounting firm and asked why Binance hasn’t done that yet.
  • CZ admitted that they haven’t been in talks with a Big Four accounting fund while also stating that a lot of the reputable auditing companies are reluctant to work with crypto businesses because of what happened with FTX.
  • He also said that a lot of the auditing companies are unable to properly audit a crypto business, but said he is happy to work with anyone who can perform an audit competently.
  • On the matter of liabilities and the fact that some are concerned by the fact that Binance there’s no information on that, CZ once again said that “Binance doesn’t owe money to anyone.”

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