The top crypto exchange by trading volume, Binance, is not the next FTX, according to an analysis by CryptoQuant.
The analytics business cites the on-chain data to substantiate assertions made in a recent audit that Binance is overcollateralised.
At the time of Binance’s Proof of Reserves announcement, CryptoQuant estimated Binance’s BTC reserves to be 591,939 BTC. This contrasts with the Customer Liability Report Balance of 597,602 BTC in the PoR report.
99% of Binance’s obligations were covered by CryptoQuant data via the ticker symbol for bitcoin. It was said that collateralisation is 101% when the exchange’s assets and debts are considered.
According to CryptoQuant, Binance is witnessing a different number of outflows than FTX did in the days preceding its collapse. While withdrawals have grown, they remain negligible compared to the total reserves of the exchange. Changpeng Zhao, CEO of Binance, tweeted that he welcomes the stress test.
Since FTX’s crash, Binance’s bitcoin reserves have increased by 4%, according to CryptoQuant. Ether and stablecoin reserves have fallen by 6% and 15%, respectively.
CryptoQuant notes that Binance’s reserves are cleaner than FTX- Alameda’s, or they are not dependent on the exchange’s native cryptocurrency, BNB. A liquidity crisis indicates that the exchange’s FTT token significantly funded FTX’s sister firm Alameda Research ultimately leading to its collapse.
88.95% of Binance’s reserves are clean. Compared to OKX (100%), Crypto.com (97%), Kucoin (81.64%), Bitfinex (66.5%), and Huobi (56%), this percentage is significantly higher.
Nansen data estimates Binance’s total reserves to be $57.4 billion, compared to $3.04 billion for Huobi, $2.47 billion for Kucoin, $3.36 billion for Crypto.com, and $6.8 billion for OKEx. Nansen doesn’t have data for Bitfinex.
Trust on-chain
Hochan Chung, the head of marketing at CryptoQuant, notes the availability of on-chain data to substantiate all claims, even if you do not believe the exchange’s public report. However, there have been some concerns over Binance’s financial stability.
For the first time in the history of the finance sector, Proof of Reserves delivers real-time, transparent, and non-manufactured data. The data is self-audited, thanks to blockchain technology.
For corporate control, on-chain data cannot account. FTX was notorious for expensive employee incentives, such as luxurious residences for workers, a hefty DoorDash allowance for food delivery, and a chartered plane to transport Amazon packages from the United States to the Bahamas.
In a court declaration, FTX’s new CEO, John J. Ray III, stated he had never seen such a total collapse of corporate controls and such a complete absence of reliable financial information as occurred. This situation is exceptional due to the concentration of power in the hands of a relatively small group of inexperienced, naive, and potentially corrupted persons.
Hal Schroeder, a former member of the Financial Accounting Standards Board and professor at Rutgers University, told the Wall Street Journal that Binance’s audit did not comment on the soundness of its internal controls.
Patrick Hillmann, chief strategy officer of Binance, recently stated that business travel at Binance is more austere than at FTX.
The value of BNB tokens has decreased by roughly 3% in the past 24 hours to $265.