Binance "Facing FUD" Full Text: Response to Recent Media and Community Doubts

文章来源：Binance

For some time now, there has been a wave of "FUD" directed at Binance, spreading across various media and communities regarding user asset security, Binance's financial status, verification of company partnerships, and judicial investigations. Based on the principle of "openness and transparency," in order to prevent misinformation from being amplified, we have organized and responded to the following frequently mentioned doubts, hoping to clarify the truth.

1. Regarding the temporary suspension of USDC withdrawals

Why is USDC not available for withdrawal? ------ On September 5, 2022, Binance issued an announcement stating that users' USDC, USDP, and TUSD stablecoin balances and new deposits would be automatically converted to BUSD at a 1:1 ratio. This means that there are no trading pairs for USDC and other stablecoins on the Binance platform, and users can withdraw any of these assets at a 1:1 ratio against their BUSD-valued assets at any time. Therefore, when there is a large-scale withdrawal of USDC, the platform needs to convert BUSD to USDC first.

Why does the conversion take so long? ------ The conversion between PAX/BUSD and USDC needs to go through a dollar account at a bank in New York, USA, and can only be done during banking hours, leading to delays in conversion. In the future, we will optimize this conversion channel. CZ has provided a detailed explanation in a Twitter post on December 13.

Is there a liquidity issue on the platform? ------ It is important to emphasize that even during the suspension of USDC withdrawals, users can still withdraw other stablecoins such as BUSD, USDT, USDP, and TUSD normally. User funds are supported at a 1:1 ratio, and there is no liquidity issue.

2. Regarding Binance not having sufficient reserves for user withdrawals

All users' assets on Binance are supported at a 1:1 ratio, and users 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 net withdrawals reached $6 billion between December 12 and 14, we withstood the test. The facts prove that we will gain more trust from users after this storm.

Binance's business model is very simple; the platform primarily profits from transaction fees, and since the establishment of Binance Labs in 2018, the historical investment return rate has reached 2100%, managing a total asset amount of $7.5 billion. Therefore, Binance's financial status is very healthy, and we have sufficient funds to cover daily operations and weather any difficult periods.

Binance will not misappropriate user funds for any trading or investment, nor does it have any borrowing debts, and it is not on the creditor list of any recently bankrupt companies. A few negative cases do not represent the entire industry. Many people use a few negative cases to cast overall doubt and attack the crypto industry, indicating that the development of the entire industry still has a long way to go. As an industry leader, Binance will take on more responsibility and continue to build the industry.

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

Mazars targeting Binance? ------ Regarding Mazars, the company has stopped cooperating with all crypto enterprises, not just targeting Binance.

Did the Big Four also refuse Binance? ------ As for the traditional "Big Four" accounting firms, they have not yet collaborated with any crypto company for on-chain reserve verification. The audit that has recently sparked widespread discussion regarding "a listed exchange obtaining an audit from a certain Big Four accounting firm" needs to be clarified; this audit pertains to the financial status of that listed company, not on-chain asset reserve verification, which is fundamentally different from the on-chain asset verification that Binance is advocating.

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

4. Why was only BTC verification launched?

BTC verification is just the first step. We will use BTC as a starting point to complete on-chain verification for some mainstream cryptocurrencies as soon as possible, at least allowing users to check for themselves. Please click link to see how to view/verify on-chain assets. The second batch of asset reserve verifications is about to go live, and you are welcome to follow the Binance Asset Reserve Proof System for the latest progress.

Binance takes the utmost care in all work involving user assets, especially given the numerous cryptocurrencies and large volumes. We require collaboration from multiple teams, including technology, finance, security, and risk control, which takes a significant amount 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 cryptocurrencies and network functions in the future. We will also provide additional technical solutions, such as zk-SNARKs, to offer users more assurance and further prove our financial health.

5. Regarding reports of "Binance refusing to disclose financial information" and "financial black box"

Binance does not need to disclose detailed financial status for two reasons: first, listed companies must publicly disclose financial details to their investors, but Binance is a private company and not a publicly listed entity; second, Binance is financially healthy and self-sufficient, with no external financing needs or external investors, and currently has no intention of going public.

In many jurisdictions where we have local operations, we have already shared or are in the process of sharing operational and financial information as required by local regulatory authorities. Due to the vast amount of information, some disclosures typically require up to six months.

As mentioned in points "2," "3," and "4," Binance's capital structure is debt-free, and the funds earned through transaction fees and investments can fully cover daily operations, completely separate from the assets purchased and held for users, with no misappropriation. Based on the principles of "user first" and "openness and transparency," Binance will continue to promote on-chain asset reserve verification to facilitate external inquiries and verification of user asset storage.

6. Regarding Reuters' report on "the U.S. Department of Justice investigating Binance"

This is not the first time the media has reported this about us; in fact, similar reports occur several times a year. While some descriptions in the reports, such as "internal disputes" and "possible out-of-court settlements," contain ambiguous language, some readers are only willing to believe the sensational headlines. We cannot respond to any ongoing judicial discussions that are contentious, but in the face of unilateral media accusations, we also wish to clarify and emphasize the following facts that have long been overlooked by the public:

First, Binance is the exchange with the most compliance licenses/permits globally. Binance has obtained local regulatory approvals or operating licenses in multiple countries and regions around the world, including but not limited to: France, Italy, Spain, Poland, Lithuania, Australia, New Zealand, Dubai, Bahrain, Abu Dhabi, Kazakhstan, and more.

Second, Binance is the exchange that invests the most in combating crime. We have assembled a world-class security and compliance team composed of experts from top investigative organizations and law enforcement agencies. Just this year, the security and compliance team has increased by over 500%. On the other hand, our security team also works closely with law enforcement agencies, organizing multiple cryptocurrency law enforcement training courses and conferences globally, sharing our experiences and knowledge, and assisting law enforcement in combating criminals. Since November 2021, Binance has responded to over 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 over 70 anti-cybercrime seminars with global law enforcement agencies.

7. Regarding the claim that Binance destroyed FTX?

"No, it was FTX that destroyed itself," CZ clarified to the community in a Twitter post on December 6. The downfall of FTX was due to its misappropriation of user assets, and a healthy operating company would not collapse because of a tweet.

Binance does not view other exchanges as "competitors." Currently, the industry has reached 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, and others coexisting in this ecosystem, allowing more people to enter the blockchain cryptocurrency field without spending time and resources on any unhealthy "competition" within the existing scope.