Binance publishes: First response to recent media and community questions

Today, Binance issued a statement, responding for the first time to several FUDs that have been widely circulated recently, including asset security, Binance’s financial situation, cooperation with verification companies, and judicial investigations.

For some time, "FUD" against Binance has been spreading in the media and community from multiple angles, such as user asset security, Binance's financial situation, cooperation with verification companies, and judicial investigations. Based on the principle of "openness and transparency", in order to prevent false information from being further amplified, we will sort out and respond to the following frequently mentioned questions one by one, hoping to clarify the truth.

1. Regarding the temporary suspension of USDC withdrawals

Why is there not enough USDC to withdraw? - Binance announced on September 5, 2022 that the user's USDC, USDP, TUSD stablecoin balances and new top-ups will be automatically converted to BUSD at a 1:1 ratio, that is, there is no trading pair of stablecoins such as USDC on the Binance platform, and users can withdraw assets denominated in BUSD at any time at a 1:1 ratio for USDC, USDP and TUSD. Therefore, when there is a large-scale USDC withdrawal, the platform needs to convert BUSD into USDC first.

Why does the conversion take so long? — The previous conversion between PAX/BUSD and USDC required a US dollar account at a bank in New York, USA, and could only be done during the bank's business hours, which caused a delay in the conversion. In the future, we will optimize this conversion channel. CZ has explained this in detail in his Twitter post on December 13.

Is there a problem with the platform's liquidity? - It should be emphasized that even during the period when USDC withdrawals are suspended, users can still withdraw other stablecoins such as BUSD, USDT, USDP, and TUSD normally. User funds are supported 1:1, and there is no liquidity problem.

2. Binance does not have sufficient reserves for users to withdraw coins

All users' assets on Binance are supported 1:1, and users also have the right to withdraw their assets at any time. Binance will support and serve users' withdrawal needs 24/7. Therefore, if users have any concerns, they can withdraw their assets at any time (we recommend using a decentralized open source wallet - Trust Wallet ). Although the platform's net withdrawals reached 6 billion US dollars between December 12 and 14, we have withstood the test. Facts have proved that we will win the trust of more users after this storm.

Binance's business model is very simple. The platform makes profits mainly by charging transaction fees. Since the establishment of Binance Labs in 2018, the historical return on investment has been as high as 2100%, and the total assets under management have reached US$7.5 billion. Therefore, Binance's financial situation is very healthy. We have sufficient cash reserves to cover daily operations and survive any difficult cycles.

Binance will not misappropriate users' funds for any transactions or investments, nor does it have any loan debts, nor is it on the creditor list of any company that has recently gone bankrupt. A few negative cases cannot represent the entire industry. Many people use a few negative cases to launch overall suspicion and attacks on the crypto industry, which shows that the development of the entire industry still has a long way to go. As an industry leader, Binance will take on more responsibilities and continue to build the industry.

3. Regarding Mazars and the Big Four accounting firms’ refusal to serve Binance

Mazars targeting Binance? — Regarding Mazars, the company stopped cooperating with [all crypto companies] including Binance, not just Binance.

The Big Four also rejected Binance? ——Regarding the traditional "Big Four" accounting firms, as of now, they have not cooperated with any crypto company in the verification of [on-chain reserve funds]. Regarding the recent widespread discussion of "a listed exchange obtained an audit by a Big Four accounting firm", it needs to be explained and clarified that the audit is aimed at the financial status of the listed company, not the verification of on-chain asset reserves, which is fundamentally different from the on-chain asset verification that Binance is calling for.

On-chain verification of crypto enterprise reserves is a very new field. At present, we are still actively communicating with companies willing to provide verification services for crypto enterprises, and we will share the latest progress with you soon.

4. Why is only BTC verification launched?

BTC verification is just the first step. We will use BTC as a starting point to complete the on-chain verification of some mainstream currencies as soon as possible, at least so that users can query on their own. Please click the link to see how to view/verify on-chain assets. The reserve verification of the second batch of assets will be launched soon. Please keep an eye on 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 numerous currencies and huge volumes. We need the collaboration of multiple teams such as technology, finance, security and risk control, and it takes a lot of 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 additional technical solutions, such as zk-SNARKs, to provide users with more assurance and further prove our financial health.

5. Reports on “Binance refuses to disclose financial information” and “financial black box”

Binance does not need to disclose detailed financial information for two reasons: first, listed companies must disclose their financial details to the outside world and their investors, but Binance is a private company, not a listed company; second, Binance is financially healthy and self-sufficient, has no external financing needs or external investors, and has no intention of going public at this stage.

In many jurisdictions where we have local operations, we have or are in the process of sharing operational and financial information as required by local regulators, a disclosure process that can take up to six months in some cases due to the volume of information.

As mentioned in Articles 2, 3 and 4 above, Binance's capital structure is debt-free, and the funds earned through transaction fees and investments can fully cover daily operations, and are completely separate from the assets purchased and held for users, and there is no misappropriation. Based on the principles of "user first" and "openness and transparency", Binance will continue to facilitate the outside world to query and verify the storage of user assets by promoting on-chain asset reserve verification.

6. Regarding Reuters’ report on “U.S. Department of Justice launches investigation into Binance”

This is not the first time that the media has reported on us in this way. In fact, similar reports occur several times a year. Although some descriptions in the reports, such as "internal disputes" and "possible out-of-court settlement", are ambiguous, some readers are only willing to believe eye-catching headlines. We are currently unable to respond to any controversial judicial discussions, but in the face of unilateral accusations 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 the exchange with the most compliance permits/licenses in the world. Binance has obtained local regulatory approval 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 invests the most in fighting crime. We have built a world-class security and compliance team composed of experts from top investigative organizations and law enforcement agencies. This year alone, the number of people in the security and compliance team has increased by more than 500%. 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 to share our experience and knowledge and assist law enforcement agencies in fighting criminals. Since November 2021, Binance has responded to more than 47,000 law enforcement requests with an average response time of three days (which is faster than any traditional financial institution), and has participated in more than 70 anti-cybercrime workshops with law enforcement agencies around the world.

7. About Binance destroying FTX?

"No, FTX destroyed itself," CZ explained to the community on Twitter on December 6 that FTX collapsed because it misappropriated user assets, and a healthy business would not collapse because of a tweet.

Binance does not regard other exchanges as "competitors". The current industry reaches less than 6% of the population. We are more focused on continuously promoting and expanding industry adoption. We also hope to see more exchanges, blockchains, wallets, etc. coexist in this ecosystem, so that more people can enter the field of blockchain and cryptocurrency, instead of spending time and resources on any unhealthy "competition" within the existing scope.