- Binance’s PoR reveals a significant reduction in its USDC reserves post the Silvergate Bank collapse.
- Coinbase CEO, Brian Armstrong, hints at Binance trading its USDC for another stablecoin.
Binance’s PoR and The Silvergate Saga
One of the premier cryptocurrency exchanges, Binance, has recently unveiled its most recent proof-of-reserves (PoR), a transparent depiction of its cryptocurrency holdings. However, what truly stole the spotlight was the notable shift in its USD Coin (USDC) reserves around the time of Silvergate Bank’s downfall, sparking a flurry of conversations on X (previously recognized as Twitter).
According to the recently publicized reserve audit, Binance seemingly maintains ample cryptocurrency and liquid assets to comfortably cover all user-held funds. A detailed snapshot reveals a net balance ratio in excess of 100% against customer net balances across all its asset categories.
However, amidst this sound financial depiction, the PoR’s portrayal of Binance’s USDC reserve activity post-Silvergate’s collapse and subsequent stablecoin depeg was under the microscope. The data presented showed Binance’s USDC reserve plummeting sharply from a staggering $3.4 billion on March 1 to a mere $23.9 million by May 1.
USDC Movements and On-Chain Data
Although Binance initiated the internal conversion of customer-held USDC to Binance USD in September, it still showcased substantial USDC reserves. On-chain data insights reveal that following Silvergate’s unfortunate collapse on March 12, Binance began an active conversion of its USDC reserves into two of the crypto giants: Bitcoin (BTC) and Ether (ETH).
Aleksandar Djakovic, a noted on-chain analyst from X, spotlighted that between March 12 and May 1, Binance acquired an approximate 100,000 BTC and 550,000 ETH. Intriguingly, this combined purchase tallied to around $3.5 billion, aligning perfectly with the earlier surplus of its USDC holdings. Binance, at this juncture, has chosen silence and hasn’t addressed requests for comments regarding these findings.
In an interesting turn of events, Brian Armstrong, Coinbase’s CEO, during their Q2 earnings discussion, subtly indicated Binance’s potential sale of USDC in exchange for another yet-unnamed stablecoin.
PoRs, in the aftermath of the FTX crypto exchange debacle in November 2022, have transformed into a vital tool for crypto exchanges. This method serves as a testament to their asset holdings and offers a transparency layer to the public, especially as the crypto domain amplifies its call for greater clarity and integrity.