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A hedge fund manager whose firm was severely impacted by the collapse of FTX in November is now cautioning about a potential second “implosion” at Binance.
On Tuesday, Travis Kling, the founder of Ikigai Asset Management, shared a historical timeline detailing a series of “negative events” at Binance since December 2022, which has garnered attention from some of the exchange’s senior executives.
How Binance Resembles FTX
Kling’s timeline features over 40 incidents that have raised concerns regarding Binance’s reliability over the past year. These include its exit from markets such as Canada, significant layoffs, and simultaneous lawsuits from the primary market regulators in the United States.
In an interview with The Delphi Podcast on Thursday, Kling expressed his suspicion that Binance might be experiencing an asset-liability mismatch similar to that of FTX—where exchanges lack sufficient assets to meet a surge in customer withdrawal demands. He pointed to the exchange’s purported inability to separate customer assets as increasing the risk of such a failure.
“Is there more BNB than people want back there?” he inquired. “If it turns out that he’s been purchasing BNB to support the price so that it doesn’t collapse and create this gap, and he’s been utilizing customer deposits to do that, it really is kind of an FTX 2.0.”
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When questioned about why the exchange has not yet collapsed despite its challenges, Kling speculated on two possible explanations: the use of Binance CEO Changpeng Zhao (CZ)’s substantial personal wealth to stabilize the company, and his significant level of trust among Asian investors.
Binance Execs Respond
One area of concern regarding Binance was the sudden wave of executive exits this year, the latest being the resignation of former product head Mayur Kamat.
However, Patrick Hillman—a previous Binance executive—came to the exchange’s defense in response to Kling. “Binance has not collapsed because it holds the largest market share in the world’s most critical crypto markets,” he asserted on Wednesday.
Although not a direct reply, CZ took to X (formerly Twitter) on Thursday to alleviate concerns about “negative news/rumors” surrounding Binance, instead highlighting some positive developments for the company this year.
“There are also: won court cases, bank run managed and then record deposits, new fiat channels, smooth transition of old products and launch of new products, new hires, new markets,” he stated.
“All withdrawals (and deposits) are being managed properly. All customer funds are SAFU, and 100% reserved,” he added.
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