7 min read
Facing "FUD"｜Response to recent media and community questions
For a period of time, "FUD" against Binance has been one after another, and it has been spreading in the media and the community from multiple perspectives, such as user asset security, Binance's financial status, cooperation with verification companies, and judicial investigations.
By: Flagship Team
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Based on the principle of “openness and transparency”, in order to prevent false information from being further magnified, we will sort out and respond to the following frequently mentioned questions one by one, hoping to clarify the truth.
1. About the temporary suspension of withdrawal of USDC
Why is USDC not mentioned enough? ——Binance announced on September 5, 2022 that the user’s USDC, USDP, TUSD stablecoin balance and new recharges will be automatically converted to BUSD at a ratio of 1:1, that is, USDC does not exist on the Binance platform And other stable currency trading pairs, and users can withdraw assets denominated in BUSD at a ratio of 1:1 to USDC, USDP and TUSD at any time. Therefore, when there is a large-scale USDC withdrawal, the platform needs to convert BUSD to USDC first.
Why does conversion take so long? ——The previous conversion between PAX/BUSD and USDC needs to go through a US dollar account in a bank in New York, USA, and can only be carried out during the bank's business hours, resulting in a delay in conversion. In the future, we will optimize for this conversion funnel. CZ has already explained this in detail in his Twitter on December 13th.
Is there a problem with platform liquidity? ——It should be emphasized that even during the suspension of USDC withdrawals, users can still withdraw other stable coins such as BUSD, USDT, USDP, and TUSD normally. User funds are supported by 1:1, and there is no liquidity problem.
2. Binance does not have sufficient reserves for users to withdraw coins
All users' assets in Binance are supported 1:1, and users also have the right to withdraw coins at any time. Binance will support and serve users' coin withdrawal needs 24/7. Therefore, if users have any worries, they can withdraw assets at any time (recommended to use decentralized open source wallet - Trust Wallet). Although between December 12th and 14th, the platform's net withdrawals reached 6 billion US dollars, we have withstood the test. Facts have proved that we will win the trust of more users after this turmoil.
Binance’s business model is very simple. The platform mainly earns profits by charging transaction fees. The company’s assets are completely separated from user custody assets. The capital structure is debt-free. Therefore, Binance’s financial status is very healthy. We have enough capital reserves to cover daily operations. And get through any tough cycles.
As for the source of funds for Binance Labs’ investment and acquisitions mentioned by the outside world, since its establishment in 2018, Binance Labs has invested in more than 200 projects, with a historical return on investment of 2100% and a total asset management of US$7.5 billion. Funds are deployed in the investment field.
Binance will not embezzle users' funds for any transactions or investments, nor does it have any debts, nor is it on the list of creditors of any company that has recently gone bankrupt. A few negative cases do not represent the entire industry. Many people started to doubt and attack the encryption industry as a whole through a few negative cases, which shows that the development of the entire industry still has a long way to go. As an industry leader, Binance will take more responsibilities and continue to build the industry.
3. Questions about Mazars and Big Four accounting firms refusing to serve Binance
Mazars against Binance? ——Regarding Mazars, the company stopped working with [all crypto companies] including Binance, not just Binance.
The Big Four also rejected Binance? ——For traditional accounting firms, it is very difficult to verify the overall reserve assets on the chain of encrypted exchanges. Regarding the recently widely discussed “a listed exchange was audited by a big four accounting firm”, what needs to be explained and clarified is that the audit is aimed at the financial status of the listed company, not the centralized exchange chain. The verification of the overall reserve assets on the chain is fundamentally different from the verification of assets on the chain that Binance is calling for.
The on-chain verification of the overall reserves of encrypted companies is a very new field. At present, we are still actively communicating with companies willing to provide verification services for encrypted companies, and will share the latest progress with you soon.
4. Why only BTC verification is launched?
BTC verification is only the first step. We will use BTC as a starting point to complete the chain verification of some mainstream currencies as soon as possible, at least allowing users to query by themselves. Please click on the link to see how to view/verify assets on the chain. The reserve verification of the second batch of assets will be launched soon, and you are welcome to pay attention to the Binance Asset Reserve Proof System to check the latest progress.
Binance takes the most cautious attitude towards all work involving user assets, especially in the face of various currencies and huge volume, we need the cooperation of multiple teams such as technology, finance, security and risk control, and it takes a lot of money Time to organize and verify. At the same time, we will continue to collect user feedback as a basis for the launch and improvement of other currencies and network functions in the future. We will also provide users with more guarantees and further prove our financial health by providing additional technical solutions, such as zk-SNARKs.
5. Reports on “Binance Refuses to Disclose Financial Information” and “Financial Black Box”
Binance does not need to disclose detailed financial status for two reasons: First, listed companies must disclose company financial details to their investors, but Binance is a private company, not a listed company; second, Binance is financially healthy Self-sufficient, no external financing needs and external investors, and no intention to go public at this stage.
In many jurisdictions where we operate, we have shared or are sharing operational and financial information as required by local regulators. Some typically require a disclosure process of up to six months due to the sheer volume of information.
As mentioned in “2”, “3” and “4” above, Binance's capital structure is debt-free, and the funds earned through transaction fees and investment can fully cover daily operations, and are related to buying and holding for users. The assets are completely separated and there is no misappropriation. Based on the principles of “customer first” and “openness and transparency”, Binance will continue to promote asset reserve verification on the chain to make it easier for the outside world to query and verify user asset storage.
6. Regarding Reuters’ report “U.S. Department of Justice launches investigation into Binance”
This is not the first time the media has reported us like this, in fact, similar reports happen several times a year. Although there is room for ambiguity in some descriptions in the report, such as “internal disputes” and “possible out-of-court settlement”, some readers are only willing to believe the eye-catching headlines. We are currently unable to respond to any controversial judicial discussions, but in the face of unilateral allegations from the media, we also hope to clarify and emphasize the following facts that have been ignored by the public for a long time:
First, Binance is an exchange with the most compliance approvals/licenses in the world. Binance has obtained local regulatory approvals or operating licenses in many countries and regions around the world, including but not limited to: France, Italy, Spain, Poland, Lithuania, Australia, New Zealand, Dubai, Bahrain, Abu Dhabi, Kazakhstan, etc.
Second, Binance is the exchange that spends the most on fighting crime . We've assembled a world-class security and compliance team comprised of experts from top investigative organizations and law enforcement agencies, which has grown by more than 500% this year alone. On the other hand, our security team also works closely with law enforcement agencies, organizing multiple cryptocurrency law enforcement training courses and conferences around the world, sharing our experience and knowledge, and assisting law enforcement agencies to fight criminals. Since November 2021, Binance has responded to more than 47,000 law enforcement requests with an average response time of three days (faster than any traditional financial institution), and has participated in more than 70 anti-law enforcement requests with global law enforcement agencies. Cybercrime seminar.
7. About Binance destroying FTX?
“No, FTX destroyed itself”, CZ once explained to the community on Twitter on December 6th that FTX fell because it misappropriated user assets, and a healthy company will not be destroyed by a tweet. fall down.
Binance will not regard other exchanges as “competitors”. The current industry touches less than 6% of the population. We are more focused on continuously promoting and expanding industry adoption. We also hope to see more exchanges, blockchain, Wallets, etc. coexist in this ecosystem, allowing more people to enter the field of blockchain cryptocurrency without spending time and resources on any unhealthy “competition” within the existing scope.
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