Binance Official: First Response to Recent Media and Community Questions
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Binance Official: First Response to Recent Media and Community Questions
After the stress test, we will gain more users' trust.
Navigating Web3 tides with focused insightsThere has been a constant stream of FUD (fear, uncertainty, and doubt) directed at Binance recently, spreading across media and communities concerning user asset security, Binance's financial status, auditor partnerships, and judicial investigations. Upholding the principle of "transparency," and to prevent misinformation from being further amplified, we have compiled and responded to the most frequently raised concerns below in an effort to clarify the facts.
1. Regarding the Temporary Suspension of USDC Withdrawals
Why wasn't there enough USDC for withdrawals? — On September 5, 2022, Binance announced that users’ balances and new deposits of stablecoins including USDC, USDP, and TUSD would be automatically converted to BUSD at a 1:1 ratio. As such, there are no trading pairs for USDC or other stablecoins on Binance. However, users can still withdraw their assets denominated in BUSD as USDC, USDP, or TUSD at a 1:1 rate at any time. Therefore, when large-scale USDC withdrawals occur, the platform must first convert BUSD into USDC.
Why does the conversion take so long? — The conversion between PAX/BUSD and USDC requires processing through a U.S. dollar account at a bank in New York, which can only be done during the bank’s business hours, resulting in delays. We are working to optimize this conversion channel. CZ provided a detailed explanation in his Twitter post on December 13.
Is there a liquidity issue with the platform? — It should be emphasized that even during the temporary suspension of USDC withdrawals, users could still withdraw other stablecoins such as BUSD, USDT, USDP, and TUSD normally. All user funds remain fully backed 1:1, indicating no liquidity issues.
2. Regarding Claims That Binance Lacks Sufficient Reserves for User Withdrawals
All user assets on Binance are fully backed 1:1, and users retain full rights to withdraw their funds at any time. Binance supports withdrawal requests 24/7. Therefore, if users have any concerns, they are free to withdraw their assets at any moment (we recommend using the decentralized open-source wallet – Trust Wallet). Despite net withdrawals reaching $6 billion between December 12 and 14, we successfully withstood this stress test. In fact, we believe this episode will ultimately strengthen user trust in Binance.
Binance’s business model is straightforward: the platform primarily earns revenue through transaction fees. Since the founding of Binance Labs in 2018, its historical investment return rate has reached 2100%, managing over $7.5 billion in assets. Binance maintains strong financial health, with sufficient reserves to support daily operations and endure any market downturns.
Binance does not use user funds for any trading or investments, carries no debt obligations, and is not listed as a creditor in any recent corporate bankruptcies. A few isolated negative cases should not represent the entire industry. Many people use these rare incidents to cast unwarranted suspicion or attacks on the broader crypto industry, highlighting how much further the industry still needs to grow. As an industry leader, Binance will continue to take greater responsibility in building and advancing the ecosystem.
3. Regarding Mazars and the Big Four Accounting Firms Refusing to Serve Binance
Is Mazars targeting Binance? — Regarding Mazars, the firm suspended cooperation with all cryptocurrency companies, not just Binance.
Have the Big Four also refused Binance? — As of now, none of the traditional “Big Four” accounting firms have engaged in on-chain reserve verification with any crypto company. Regarding recent discussions about “a listed exchange receiving an audit by one of the Big Four,” it’s important to clarify: such audits pertain only to the financial statements of the listed entity, not to on-chain asset reserve verification. This is fundamentally different from the type of on-chain asset verification Binance advocates for.
On-chain verification of crypto company reserves is still a nascent field. We are actively engaging with firms willing to provide such services and will share updates soon.
4. Why Has Only BTC Verification Been Launched So Far?
The BTC verification is just the first step. Starting with BTC, we aim to quickly complete on-chain verifications for several major cryptocurrencies, enabling users to independently verify holdings. Click here to learn how to view and verify on-chain assets. The second batch of reserve verifications is coming soon—please stay tuned via the Binance Proof-of-Reserves System.
Binance approaches all matters related to user assets with the utmost caution. Given the vast number of tokens and scale involved, coordination among technical, finance, security, and risk management teams is required, making the verification process time-consuming. We will continue gathering user feedback to guide future rollouts and improvements for additional tokens and network features. Additionally, we plan to introduce advanced technical solutions such as zk-SNARKs to provide stronger assurances and further demonstrate our financial integrity.
5. Regarding Reports Claiming “Binance Refuses to Disclose Financial Information” or “Financial Black Box”
Binance is not obligated to publicly disclose detailed financial information for two reasons:
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First, public companies are required to disclose financial details to investors, but Binance is a private company and not publicly listed;
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Second, Binance is financially self-sustaining, with no need for external funding or investors, and currently has no plans to go public.
In many jurisdictions where we operate locally, we already share or are in the process of sharing operational and financial data with local regulators as required. Due to the volume of information, some disclosures may take up to six months to complete.
As explained in points 2, 3, and 4 above, Binance maintains a debt-free capital structure. Revenue generated from trading fees and investments fully covers operating expenses. User assets are held separately and never commingled. In line with our principles of “user-first” and “transparency,” Binance will continue advancing on-chain proof-of-reserves systems to enable easy public verification of user asset holdings.
6. Regarding Reuters' Report on “U.S. DOJ Investigating Binance”
This is not the first time such reports have surfaced about us. In fact, similar stories emerge several times each year. While certain phrases like “internal disagreements” or “potential out-of-court settlement” leave room for interpretation, some readers focus only on sensational headlines. We cannot comment on ongoing legal matters, but in response to one-sided media claims, we want to highlight key facts often overlooked:
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First, Binance holds more regulatory licenses/approvals than any other global exchange. We have obtained regulatory approvals or operating licenses in multiple countries and regions, including but not limited to: France, Italy, Spain, Poland, Lithuania, Australia, New Zealand, Dubai, Bahrain, Abu Dhabi, and Kazakhstan.
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Second, Binance invests more in combating crime than any other exchange. We’ve built a world-class security and compliance team composed of experts from top investigative and law enforcement agencies. This year alone, we’ve grown our compliance team by over 500%. Our security team collaborates closely with law enforcement globally, organizing numerous cryptocurrency training programs and conferences to share knowledge and assist authorities in tracking down criminals. Since November 2021, Binance has responded to over 47,000 law enforcement requests—with an average response time of just three days (faster than any traditional financial institution)—and participated in over 70 anti-cybercrime workshops worldwide.
7. Did Binance Destroy FTX?
“No, FTX destroyed itself,” CZ clarified in a Twitter post on December 6. FTX collapsed due to misuse of customer funds. A healthy company would not collapse simply because of a single tweet.
Binance does not view other exchanges as “competitors.” With less than 6% of the global population currently engaged in the crypto space, we are focused on driving adoption and expanding the industry. We welcome coexistence among more exchanges, blockchains, wallets, and participants within the ecosystem, aiming to bring more people into blockchain and crypto—not spending time or resources on unhealthy competition within the existing market.
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