In mid-December 2022, users of Binance, the largest crypto exchange by volume, began to withdraw funds en masse. Binance has so far proved to be solvent amid this stress test, but could it eventually meet the same fate as FTX?
There has been a recent torrent of fear, uncertainty, and doubt (FUD) regarding the survival of Binance. The panic was preceded by news of regulatory pressure on the company against the backdrop of the collapse of a close competitor, FTX.
BeInCrypto reached out to a handful of crypto company executives and enthusiasts to get their opinion on the ‘health’ of Binance.
Binance Not the Same
Green Crypto Processing COO Ivona Gutovic believes that Binance customers have nothing to worry about:
“At the moment, it is safe to say that Binance will not collapse after FTX. The whole point is that the problems are a consequence of the situation with FTX.”
According to Gutovich, the negative light that has been cast on the exchange is purely driven by FUD.
Roman Kurzenev, an active investor and crypto expert, shared a similar opinion. He drew attention to two main points:
- Binance has been under investigation since 2018. During this time, no traces of crime could be found.
- The crypto exchange has been actively cooperating with regulators.
This combination of factors suggests that Binance will likely not meet the same fate as FTX, according to our Kurzenev.
Binance Crash not Ruled out
StormGain crypto exchange expert Dmitry Noskov has a different opinion. He drew attention to a number of points that, in his opinion, should make market participants doubt Binance’s integrity:
- The crypto exchange is trying not to disclose its working methods and financial policies.
- The structure of Binance raises a lot of questions. Noskov drew attention to the fact that even the director of strategy for the crypto exchange, Patrick Hillmann, could not name the parent company of the trading platform to journalists, citing a corporate reorganization.
- It is possible that Binance uses its own coins (Binance USD stablecoin and BNB token), which are in the top 10 capitalizations, for reinvestment. If the assumption is correct, the risk of a cascading liquidation cannot be ruled out, following the example of FTX
“FTX provided loans in FTT to its subsidiary Alameda Research while lying about the absence of a relationship between the two. When the truth came out, the outflow of funds led to a shortage of liquidity. A similar scenario could happen to Binance,” said Noskov.
The founder of Kick Ecosystem, Anti Danilevsky, also gave a negative forecast.
Danilevsky drew attention to the increased interest that the crypto exchange offers for staking and lending. According to his observations, this behavior suggests that Binance can “scroll” money, which means gray schemes are likely involved in the business, which, among other things, led to the collapse of FTX.
The Conclusion
There are questions about the true business model of Binance. The lack of full transparency doesn’t allow us to say with confidence whether the crypto exchange is doing well or not.
The absence of accusations from regulators, who have been investigating the crypto exchange business for many years, on the contrary, suggests that the company is not as bad as critics think. Binance’s active work with regulatory authorities also suggests that the owners of the trading platform carefully monitor its “health.”
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