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

“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.”

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.