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Binance exchanged USDC for BTC and ETH following the collapse of Silvergate Bank, according to a Proof of Reserves report.
On August 1, cryptocurrency exchange Binance published its most recent proof-of-reserves (PoRs), providing insight into its cryptocurrency holdings. The transfer of its USD Coin (USDC) reserves during the period of Silvergate’s downfall attracted considerable attention and sparked discussions on X (formerly Twitter).
The latest audit of reserves indicates that Binance possesses more than sufficient cryptocurrency and cash to meet user withdrawals. The ratio of Binance’s net assets to its customers’ net assets exceeds 100% across all its holdings, as illustrated in the snapshot below.
Binance asset reserve ratio to customer funds. Source: Binance
Although the report indicates a robust financial standing for Binance, the movements of its USDC reserves following the Silvergate collapse and the stablecoin’s depegging were central to the discussions. The PoR reveals that Binance’s USDC balance fell from $3.4 billion on March 1 to $23.9 million by May 1.
Binance reserves balance between December 2022–June 2023. Source: Binance
In September, Binance began the internal conversion of customer USDC to Binance USD, although it still maintained a substantial amount of USDC in its reserves at that time. On-chain data indicates that immediately after Silvergate’s collapse on March 12, Binance commenced converting its USDC reserves into Bitcoin (BTC) and Ether (ETH).
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On-chain analyst Aleksandar Djakovic observed that Binance acquired approximately 100,000 BTC and 550,000 ETH between March 12 and May 1, amounting to around $3.5 billion, equivalent to the surplus of USDC it held.
At the time of writing, Binance had not responded to Cointelegraph’s inquiries for comments.
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The details surrounding Binance’s USDC reserves have become a significant topic of interest, particularly after Coinbase CEO Brian Armstrong remarked during the company’s Q2 earnings call that Binance had exchanged USDC for another stablecoin.
PoRs have gained popularity among cryptocurrency exchanges as a means to validate their holdings and share this information publicly, promoting transparency in the wake of the FTX crypto exchange‘s collapse. The demand for greater transparency intensified within the crypto sector after FTX faced a downfall, despite its founders asserting that the financial situation was stable until its failure in November 2022.
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