CryptoQuant analysts concluded that Binance is far from being the next FTX.
CryptoQuant analysts have concluded that Binance is far from becoming the next FTX. The report may put an end to the FUD seen around the exchange in recent days.
The exchange led by Changpeng Zhao became the center of attention of the crypto market this week, even with SBF’s arrest order. In addition to the fact that its financial reserves were called into question, there was speculation that the company and its CEO could be sued for money laundering in the United States.
With FUD growing among users, Binance has had to deal with abnormal withdrawal volume in recent days, with many questioning whether the move could trigger a liquidity crisis similar to the one that caused FTX to crash.
For the CryptoQuant analysis team, this is very unlikely to happen. Examining the on-chain data, the analysts came to the conclusion that the external audit on Binance’s reserves corresponds to the truth:
“At the time of the Binance Proof of Reserves report, CryptoQuant’s estimate of Binance’s BTC reserves (liabilities) was 591,939 BTC. This compares to the PoR report’s Customer Responsibility Report balance of 597,602 BTC. We can see that the CryptoQuant data covered 99% of Binance’s liabilities.”
Differences Between Binance and FTX
The Seoul-based analytics firm claims that the high volume of withdrawals that have occurred on Binance in recent days is nowhere near in proportion to that experienced by FTX in the days leading up to its bankruptcy.
This is consistent with CZ’s comment that the amount withdrawn by users doesn’t reach the top five in the company’s history, which even needed to process more withdrawals during the FTX and Terra (LUNA) crashes.
Another difference between the exchanges is the level of exposure to their native tokens. The report states that 88.95% of Binance’s reserves are “clean.” That is, they are not tied to the BNB value. In comparison, other major exchanges such as Huobi, Bitfinex, and Kucoin have 56%, 66.5%, and 81.64% of their reserves cleared, respectively.
On-chain data still shows company CZ has increased its Bitcoin (BTC) reserves by 4% since its rival’s crash, even as it has decreased its amounts in Ethereum (ETH) by 6% and stablecoins by 15%.
Are String Numbers Reliable?
Hochan Chung, CryptoQuant’s head of marketing, says that even those who do not trust the numbers published by Binance can rely on the chain’s data to learn the current exchange situation.
Despite demonstrating that the funds are there, on-chain data cannot monitor corporate management of them. In the case of FTX, there have been several accountings and tax cover-ups involving the exchange and its associated company, Alameda Research, with Alameda using the assets of FTX clients in its operations, as the SEC recently noted.
It remains to wait for the next updates on Binance to see if the world’s largest exchange will be able to survive the current turmoil or follow in the footsteps of its former competitor.
By Audy Castaneda
