The audit firm Mazars lets go of Binance

The crisis of confidence created by the bankruptcy of FTX is rubbing off on Binance. And to make matters worse, Mazars audit firm decided to abandon the firm of Changpeng Zhao (CZ).

So far so good for Binance

According to Nansen, Binance’s net outflows (excluding BTC) amounted to $239 million in the past 24 hours. This is slightly less than the daily average of $272 million over the past week.

According Coinglass, bitcoin withdrawals are also massive. Nearly 7,000 bitcoins have been withdrawn in the past 24 hours. And more than 70,000 BTC for the whole of the past week.

By the way, Binance holds 30% of all BTC on all exchanges. Against 26% for Coinbase which, by the way, forced yours truly to withdraw their money in stablecoins rather than BTC. Worrying…

Faced with the mistrust of the market, CZ wanted to be reassuring at the microphone of CNBC. The Chinese assures that its customers “can withdraw 100% of their assets”. “Exchanges should hold users’ assets 1 for 1 and that’s what we’re doing”he added.

For now, Binance has passed this full-scale stress test. Its customers were able to withdraw the equivalent of $6 billion in one week.

Julio Monero, an analyst at CryptoQuant, notes that in nominal terms (number of BTC), recent withdrawals have reached the highest level on record (first chart).

However, bitcoin outflows as a percentage of total reserves remain below historical highs (second chart):

The analyzes of cryptoquant show that Binance’s BTC liabilities (customer deposits) are 97% backed by assets on the exchange’s BTC addresses.

So it all looks solid at first glance.

Where is the wolf?

Now that we have said all that, it is already possible to wonder if Binance borrowed money to pass the audit of Mazars. An audit that did not convince John Reed Stark, a former regulator from the SEC:

“The Audit [de Mazars] on Binance’s “Proof of Reserve” does not address the effectiveness of internal financial controls and does not vouch for the numbers […]. I worked at the SEC for over 18 years. This is how I define a “red flag”. »

Suspicions have deepened today due to the disappearance of the web page where the results of the audit were located “Proof of reserve by Mazars…

“Mazars has indicated that they will temporarily discontinue collaboration with all of their crypto clients globally.. Including Crypto.com, KuCoin and Binance. Unfortunately, we will no longer be able to work with Mazars at this time”a Binance spokesperson said.

When asked if Binance could cope with a possible demand for 2.1 billions of dollars from the trustee who is in charge of recovering the funds from FTX, CZ did not spread out too much on CNBC :

“We are financially OK” […] We’ll let our lawyers handle it. We are financially strong. »

Another reason to be suspicious: over 70% of Binance’s reserves are in BNB, BUSD, and Tether. Only 10% is in bitcoins, or about 500,000 BTC. Let’s hope Binance didn’t do like FTX by secretly printing BNB to disguise its balance sheet…

Not your key, not your Bitcoin

Anyway, keeping your BTC yourself on your own wallet remains the best way to protect yourself from criminal exchanges like FTX.

Since the brutal collapse of Sam Bankman-Fried’s house of cards, even investors on other exchanges have been on the alert. This can be seen through the increase in sales of Ledger and Trezor cold wallets.

[Cela dit, il y a nul besoin d’acheter un ledger pour retirer ses BTC vers son propre wallet]

Investors are withdrawing their bitcoins from exchanges at a rate rarely seen in the past. More than 190,000 BTC were recovered in the month of November. Or the equivalent of 3.3 billion dollars. The harvest could be similar for December the way things are going.

Note that over thirty days, Binance still shows a net inflow of 28,000 BTC while Coinbase customers withdrew 50,000 BTC.

The number of bitcoins held on Coinbase has been declining throughout the last cycle. Quite the opposite of Binance, whose BTC reserves have steadily increased:

Binance and COinbase BTC Reserves

However, the trend has been reversed for a few days. Binance saw around 10% of its assets soar. And it must continue!

BTC outflows act as a margin call on exchanges. Large withdrawals of BTC are enough to force an exchange to buy back the bitcoins it would have fun loaning out.

Given the events of the past nine months, it is quite understandable that there is a growing distrust of exchanges that manage their clients’ funds as if they were their own.

As such, the Canadian authorities have just instructed the exchanges to differentiate their own funds and those of their customers. The FTX affair has been there…

Although it is impossible to say if other exchanges have got it wrong, one thing is certain, investors who were hesitant may take their time before acquiring their first Bitcoins.

These hesitations are blessed bread. The fall in the price of Bitcoin comes to reward the bitcoiners of the first hour. The latter can shop at prices we never thought we’d see again.

The old system will sell its skin dearly and will use all possible and imaginable baseness to slow down the irresistible monetary revolution. Hodl (your keys)!

Receive a digest of news in the world of cryptocurrencies by subscribing to our new service of newsletter daily and weekly so you don’t miss any of the essential Tremplin.io!

Similar Posts