Binance denied on Feb. 27 that its alleged decision to transfer $1.8 billion of stablecoin collateral to hedge funds had any impact on user holdings.
In a statement made to Forbes, Binance chief strategy officer Patrick Hillman strongly implied that user funds were not used to those ends. He said:
“There was no commingling,” [Hillman said], because “there’s wallets and then there is a ledger.”
Hillman did not directly state whether any funds were moved, and Forbes maintained that Binance failed to disclose certain transfers in spite of Hillman’s statement.
Forbes alleged in the same report that, based on blockchain records, Binance moved $1.8 billion in stablecoin collateral to numerous hedge funds.
Notably, Forbes accused Binance of sending $1.1 billion to Cumberland DRW. The firm supposedly helped Binance convert the funds into Binance USD (BUSD).
Forbes additionally said that Binance sent an unspecified amount of money to Alameda Research — the hedge fund closely associated with the failed FTX exchange. Forbes went on to call Binance’s actions “reminiscent” of FTX’s own mismanagement.
Forbes also named two other entities — Amber Group and Tron — as recipients of “millions of dollars” worth of collateral in its original report. Alameda, Amber Group, and Tron collectively received $201 million, according to Forbes.
Supposedly, the funds moved by Binance were meant to back its B-peg USDC stablecoins. Forbes referred to these assets as “digital replicas” of Circle’s USD Coin — or assets tied to the value of USDC so that they can be circulated on Binance’s own blockchain. If Forbes’ accusations are correct, users may have been left with undercollateralized stablecoins.
Binance has previously been the target of similar accusations. On Jan. 10, the company admitted that its B-peg BUSD token was undercollateralized by as much as $1 billion on occasion. The company said at that time that it had improved its practices.
Binance’s stablecoin policies are in flux. Binance CEO Changpeng Zhao recently said that Binance will reduce reliance on but continue to support BUSD as issuance ends. In September, the exchange said it would reduce support for stablecoins other than Tether.