Binance bites back against Forbes report claiming transfer of $1.8 billion in client collateral

Quick Take

  • Binance quietly moved $1.8 billion of collateral backing its customers’ stablecoins without informing them, says a new report from Forbes.
  • The vast majority of customer funds, or $1.1 billion, was transferred to Cumberland, the crypto trading arm of Don Wilson’s DRW

"The on-chain transactions identified relate to internal wallet management," a Binance spokesperson told The Block. "While Binance has previously acknowledged that wallet management processes for Binance-pegged token collateral have not always been flawless, at no time was the collateralization of user assets affected. Processes for managing our collateral wallets have been fixed on a longer-term basis and this is verifiable on-chain."

According to blockchain data examined by Forbes, over $1.8 billion in customer funds were disbursed, all of which consisted of USD stablecoin (USDC) tokens.

The vast majority of customer funds, or $1.1 billion, was transferred to Cumberland, the crypto trading arm of Don Wilson's DRW, a Chicago-based high-frequency trading firm, that the report says, "may have assisted Binance in its efforts to transform the collateral into its own Binance USD (BUSD) stablecoin."

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Other recipients of the funds include Sam Bankman-Fried's Alameda Research, as well as Amber Group, and Tron founder Justin Sun. 

Binance's chief strategy officer, Patrick Hillman, told Forbes that moving money among multiple wallets was not a problem and a common practice at the firm. "There was no commingling," Hillman said, because "there's wallets and there is a ledger."


Disclaimer: The former CEO and majority shareholder of The Block has disclosed a series of loans from former FTX and Alameda founder Sam Bankman-Fried.

© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

About Author

Adam Morgan is a reporter covering cryptocurrency, financial markets, and economics – anything from price movements, earnings reports, and inflation to the U.S. Federal Reserve interest rate decisions and everything in between. Adam is based in London.

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