In an interview with CNBC, Binance CEO Changpeng ‘CZ’ Zhao defended the cryptocurrency exchange against claims that it is facing a liquidity crunch, stating that customer assets are held one-to-one and that the company is able to cover users’ withdrawals as they come in.
Zhao emphasized that the business model of a cryptocurrency exchange is different from that of a traditional bank, which relies on fractional reserves, and that Binance holds user assets one-to-one in order to avoid a situation where there is a lack of liquidity.
The exchange has recently seen a significant increase in withdrawals due to concerns about the sufficiency of its collateralization, and Zhao stated that Binance is working with auditors to increase transparency and disclose its liabilities.
Despite these concerns, data from Nansen shows that Binance still holds over $52 billion worth of digital assets in its wallets, with over 50% being in BUSD, USDT, and BTC.
Judith Faith has been writing about cryptocurrencies and blockchain technology for over five years. She is well versed in the industry and has an extensive network of industry contacts. She is also a frequent contributor to various cryptocurrency publications. With her vast knowledge and experience, she is able to provide insightful and valuable content to her readers. Judith is also an active investor in the cryptocurrency space and has a vested interest in the success of the industry.
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