Binance Once Again the Target of Reuter’s ‘Special Report’
- Reuters released a report claiming that Binance is not transparent as it seems and stated that it operates from the dark.
- The media outlet stated that the exchange has tried to avoid regulatory oversight and created Binance.US for that purpose.
- The crypto exchange has declined to reveal where the exchange is based, claims the special report.
- Binance hasn’t revealed its revenue, profit and cash reserves as per Reuters’ analysis of the exchange’s corporate filings.
The world’s biggest crypto exchange, Binance, and its CEO and co-founder Changpeng Zhao, also known as CZ in the crypto space, are once again the target of media firm Reuters. The latter has released a “special report” on the “dark secrets” of the crypto exchange and stated that despite the firm’s attempts to display a position of confidence, it is still not what it shows and is hiding its liabilities and concealing financial details.
According to the report, Reuters has reasons to believe that Binance executives have an interest in crypto market-makers that trade against customers of the exchange, as was the case for other exchanges like BitMEX, FTX, etc., as is clear from the lawsuit filed by the Commodity Futures Trading Commission (CFTC). Additionally, the media outlet added that while the exchange claims to have processed trades worth $22 trillion in the last 12 months, its business remains mostly hidden from the view of the general public.
It is also crucial to note that Binance crypto exchange has declined to reveal where the exchange is based, and so far, we only know that the chief executive of the exchange has purchased property in Dubai. Ever since Binance left China, investors have also feared that the platform is based in China. However, CZ confirmed that his exchange is not Chinese earlier this year.
“The company has its own crypto coin, but doesn’t reveal what role it plays on its balance sheet. It lends customers money against their crypto assets and lets them trade on margin, with borrowed funds. But it doesn’t detail how big those bets are, how exposed Binance is to that risk, or the full extent of its reserves to finance withdrawals,” noted Reuters in its report.
Moreover, Binance is also not required to issue publicly available financial statements, which is quite different from how its rival Coinbase operates as it is listed on the Nasdaq stock exchange. The world’s largest exchange has not revealed its revenue, profit, or cash reserves, and as per Reuters’ analysis of the exchange’s corporate filings, the exchange operates in the dark.
Reuters claims to have interviewed Binance’s former employees and stated that the exchange has actively avoided oversight. The report adds that CZ greenlit the plan of forming a new American arm of the exchange in order to remain outside the jurisdiction of the US regulators. On the other hand, CZ has denied such claims and stated that the decision to form Binance.US was made after consulting top law firms.
Furthermore, Reuters also analyzed the regulatory filings of Binance across 14 jurisdictions where the exchange has licenses to operate. It claims to have found that several of the units appear to have little activity, and the exchange has not revealed how much money flows between the units and the main Binance.com exchange.
Chief strategy officer at Binance, Patrick Hillmann, has denied all the allegations presented by the media outlet and stated that regulators don’t require privately-owned companies to disclose as much financial information as publicly-traded companies.
“The amount of corporate and financial information that has to be disclosed to regulators in those markets is immense, often requiring a six-month-long disclosure process,” Hillman said.
Hillman claims that it has insurance against extreme market volatility and added that it fully backs user deposits and can liquidate positions if a customer makes a losing bet on its derivative trading platform.
Interestingly, Binance recently saw investors withdraw more than $6 billion following increased scrutiny of the exchange, and as a result, Jo Johnson, the younger sibling of Boris Johnson, has quit as an advisor at the firm.
A crypto journalist with over 3 years of experience in DeFi, NFT, metaverse, etc. Parth has worked with major media outlets in the crypto and finance world and has gained experience and expertise in crypto culture after surviving bear and bull markets over the years.
