Grit Capital CEO: Binance Appears Some Red Flags

As Coincu reported this week, Binance has seen billions in net withdrawals. Additionally, the sudden halt of USDC withdrawals following a token swap issue where the exchange was unable to convert funds due to the New York bank, the liquidity provider for the swap being closed, has worried users.

According to Genevieve Roch-Decter, there are definitely some red flags with the recent situation of the exchange.

After the crypto exchange had released the Proof of Reserves system on November 25, Mazars Group, the accounting firm that supports thereof deleted the Proof of Reserves from its website. Yesterday, Coincu reported that Mazars has discontinued offering services to cryptocurrency exchanges.

Yesterday, Binance CEO CZ appeared on CNBC. In particular, the CNBC anchor asked why Binance doesn’t get an audit from a Big 4 accounting firm. CZ responded that those firms don’t actually know how to audit crypto exchanges.

Last year, Sam Bankman-Fried bought out CZ’s stake in FTX which was a $2.1 billion transaction, but CZ said they only have about $500 million which was forgotten for a while. Besides, Binance said that it could afford to repay the $2.1 billion it earned from leaving FTX last year.

Financially, we’re solid. We’ll defer to the legal professionals.

Additionally, CZ insisted that audited financials are coming, but just a few hours later, the accounting firm Mazars Group cut ties with Binance.

Along with these incidents, one of the major worries is that even if Binance is properly collateralized, things might change very rapidly if there is a bank run or if one of Binance’s biggest reserve holdings develops problems.

Furthermore, Jim Cramer who hosts Madmoneyoncnbc and runs the CNBC Investing Club, announced that he trusts his money in Draftkings more than his in Binance.

Overall, it is understandable why the situation of the exchange now seems to be just like other scenarios for crypto exchanges. However, if Binance has its confidence in the market, and its stablecoins reserves hold their peg, then everything will eventually be fine.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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