There has been a recent outpouring of Fear, Uncertainty, and Doubt (FUD) regarding the survival of Binance.
In mid-December 2022, users of Binance, the largest cryptocurrency exchange by volume, began withdrawing funds massively. So far, Binance has proven solvent amid this stress test, but could it eventually meet the same fate as FTX?
The panic raised in the community was preceded by news of regulatory pressure on the company in the context of the collapse of a close competitor, FTX.
Binance Is Not the Same
Green Crypto Processing COO Ivona Gutovic believes that Binance clients have nothing to worry about, “At the moment, it is safe to say that Binance will not crash after FTX. The point is that the problems are a consequence of the situation with FTX.”
According to Gutovich, the negative light that has been shed on the exchange is purely FUD driven.
Roman Kurzenev, an active investor and crypto expert, shared a similar opinion. He drew attention to two main points.
Binance has been under investigation since 2018. During this time, no traces of crime were found. Moreover, the crypto exchange has been actively cooperating with regulators. This combination of factors suggests that Binance may not be as lucky as FTX, according to Kurzenev.
Binance Crash Not Ruled out
StormGain cryptocurrency exchange expert Dmitry Noskov has a different opinion. He drew attention to a number of points that, in his opinion, should make market participants doubt the integrity of Binance:
First, the crypto exchange is trying not to reveal its working methods and financial policies.
Second, Noskov drew attention to the fact that even the director of strategy for the crypto exchange, Patrick Hillmann, could not name the parent company of the trading platform to journalists, citing a corporate reorganization.
Third, Binance may use its own coins (Binance USD stablecoin and BNB token), which are in the top 10 caps, for reinvestment. If the assumption is correct, the risk of a cascading sell-off cannot be ruled out, following the example of FTX.
Kick Ecosystem founder Anti Danilevsky also gave a negative forecast. He drew attention to the increased interest offered by the crypto exchange for gambling and lending.
Based on his observations, this behavior suggests that Binance may “crowd” money, which means that there are likely gray schemes involved in the business, which, among other things, led to the collapse of FTX.
To sum up, there are questions about the true business model of Binance. The lack of full transparency does not allow one to say with confidence whether the crypto exchange is working fine or not.
The absence of charges from regulators, who have been investigating the crypto exchange business for many years, by contrast, suggests that the company is not as bad as critics think. Binance’s active work with regulatory authorities also suggests that trading platform owners carefully monitor their “health”.
By Audy Castaneda
