Binance reportedly moved $1.8 billion of collateral backing customers stablecoin

ambcrypto.com:

Binance – the world’s largest crypto exchange – continues to be embroiled in controversies. The latest report by Forbes states that the crypto exchange moved $1.8 billion of collateral backing customers’ stablecoin without their knowledge. The incident took place from August 2022 to December 2022, at a time when the crypto market had seen a major slump as a result ofFTX’s collapse.

Moreover, the collateral that was transferred out belonged to customers holding B-peg USDC tokens. This rendered the token unsecure despite the exchange claiming otherwise. Binance-peg tokens aka B-Tokens are tokens minted by Binance on BNB Chain, which are pegged to leading cryptocurrencies. The crypto exchange currently mints a total of 97 B-Tokens, and one of them is pegged to Circle’s stablecoin – USDC.

According to February 27 report, the crypto exchange sent $1.1 billion of customer funds to Cumberland, a high-frequency trading firm. The firm reportedly might have converted the collateral to Binance USD (BUSD). Moreover, Cumberland was not the only firm to receive the money. Firms like Amber Group, the infamous and now-bankrupt Alameda Research, and Tron received millions of dollars.

Speaking on the matter, CSO Patrick Hillmann stated that this move was part of Binance’s “normal business conduct”. He further stated that “there was no commingling” of funds as “there’s wallets and then there is a ledger.”

Prior to this report, in January 2023, Binance stated that it had mistakenly kept customer funds and crypto asset collateral in the same wallet. According to Bloomberg, the crypto exchange had stored nearly half of B-tokens reserves in a cold wallet labeled Binance 8. The wallet, however, had more tokens than the B-tokens that were minted,