The mainstream media has been on a crypto rampage this year following several high-profile corporate meltdowns. The Wall Street Journal was at the forefront of some of those attacks.
The latest attempt to mock the crypto industry has brought down Binance and its recently released proof of reserves.
Over the weekend, the outlet reported that it had consulted accounting experts who said “investors still shouldn’t be happy with the report.”
In the past month, Binance released data on its holdings of crypto wallets, as reported by CryptoPotato. In addition, the company claimed that deposits were covered at 101%.
Binance reserves picked separately
According to Douglas Carmichael, a professor of accounting at Baruch College in New York, the report released last week by accounting firm Mazars contains no information.
The WSJ also nitpicked about a Bitcoin price gap that it claimed would make Binance reserves 97% collateralised, not 101% as the company claimed.
Binance spokeswoman Jessica Jung told the outlet that the difference of 21,860 BTCs “consists of BTC loans to customers through the Binance lending program,” adding that “the collateral for said loans is not in BTC, but in other currencies.”
The audit report did not provide details about Binance’s internal controls or systems for liquidating assets to cover leveraged loans, other accounting experts said. Former member of the Financial Accounting Standards Board, Hal Schroeder, commented:
“And we know that banks in the US, even with all the good systems, are occasionally caught off guard. In light of what we’ve seen in the Bahamas, I don’t want to conclude that all systems are that good.”
The audit also failed to reveal the name of Binance’s ultimate parent company, but did confirm that Changpeng Zhao was the majority shareholder.
In its defense, Binance has a hefty “user safe asset fund” (SAFU) that it recently topped up to $1 billion.
Dodgy trade detected
On December 11, Wu Blockchain reported some suspicious trading patterns on Binance. It added that the activity may have been related to stolen API keys from 3commas.
Breaking: On December 11, a large number of altcoins OM / AMP / NEXO / POLS / SUN / ARDR / BIFI / XVS / ARK / LOOM / OSMO were counter-traded in Binance. It seems that some users’ API key has been stolen by hackers and is related to 3Commas. pic.twitter.com/hcCKyNxvfP
— Wu Blockchain (@WuBlockchain) December 11, 2022
Binance CEO Changpeng Zhao reassured that “this appears to be just market behavior.”
Based on our investigations to date, this appears to be common market behavior. A man deposited money and started buying. (Hackers don’t deposit). Other guys followed. Cannot see the link between the accounts. 1/3 https://t.co/QlB1VnlHVs
— CZ 🔶 Binance (@cz_binance) December 11, 2022
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