Binance withdrawals surge due to red flags in its proof of reserves audit

In an ongoing Binance FUD, the leading crypto exchange saw near $1.14 billion in withdrawals yesterday. Binance founder CZ tweeted that he thinks it is a good idea to stress text crypto exchanges regularly. According to Nansan, Binance has more than $62 billion in reserve. However, some investors are still worried and thinks Binance could go bankrupt just like FTX, which resulted in the surge of Binance withdrawals recently. So should investors withdraw their funds from Binance? Let’s take a deeper look.

During the past few years we have witnessed the strategic moves of Binance in the crypto ecosystem. Amid the rise and tumble of the markets, Binance turned into the protagonist and antagonist simultaneously. While it bailed out various crypto firms and organisations during turbulent market movements its strategies led to the FTX exchange collapse. However, it seems that Binance itself is under line of fire.

Binance always tried to ensure that the markets and ecosystem operated in a transparent and decentralised manner. While propagating these policies he ensured that Binance itself led the way. Binance has always maintained that it has a specific class of assets titled proof of reserves and in order to maintain its position Binance has always tried to prove the ecosystem and market about the legitimacy of these claims.

Binance’s proof of reserve audit

Recently Binance reported that it had undertook “Merkle Tree” ie. a proof of reserves audit. Actually “Merkle Tree” is a cryptographic mechanism which ensures that collection and distribution of blockchain data is much more accessible. However the reports have raised several red flags around Binance and its finances.

Audit firm Mazar conducted the audit and released the report on the 7th of December, 2023. The report declared the fact that Binance possessed 575,742.42 Bitcoin in its reserves which belonged to the customers. Thus by this methodology, the report reached a conclusion that Binance was 101% collateralised.

Mazar said it was an AUP (Agreed Upon Procedure) audit which means the procedure was mostly stated by Binance and only the data that Binance provided were audited by the firm, and their reports were just based on those data. AUP can’t be a complete independent audit.

Commenting on the effectiveness of the audit, Mazar said:

“We make no representation regarding the appropriateness of the AUP. This AUP engagement is not an assurance engagement. Accordingly, we do not express an opinion or an assurance conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported.”

While questions were raised on why Binance did not go with the top 4 audit firms, Binance clarified it reached out to all the top audit firm but they were hesitant in auditing for proof of reserve for a private crypto exchange.

The audit which was conducted and released by an independent audit authority Mazar also raised serious doubts amongst investors regarding the financial segment of Binance. The released report did not contain any information pertaining to the qualitative aspects of the internal controls set by Binance. Apart from that the report raised doubts regarding the process followed by Binance while liquidation of assets in order to cover the margin loans.

A major red flag associated with the report was regarding the corporate structure data. There was an absence of a specific corporate structure. There were glaring differences pertaining to the total Bitcoin liabilities. The data showed the fact that the Binance platform was 97% collateralised which excluded the quantity of assets which were loaned out to people by the process of loans or margin account. However this indicated that Binance hadn’t reached its goal of a 1:1 ratio pertaining to reserves to customer assets.

The entire process of releasing the proof of reserves system which provided users with an opportunity to verify the specific assets by a Merkle tree was termed as a pointless exercise by the competitors of Binance. The reason cited behind it being termed as pointless was because the released records excluded the liabilities of Binance.

Are Binance withdrawals going smooth?

Withdrawals from Binance crypto exchanges are going smooth. At the time of writing, Binance withdrawals of crypto assets and/or converting to FIAT is taking anywhere between less than 1 minute to 1 hour. Deposits are as usual.

How to transfer crypto from Binance to BTCC

Binance is currently the number 1 crypto exchange and if it goes down, I think it is game over for crypto. There are some similarities between FTX FUD that was running a month ago and the ongoing Binance FUD, but there are differences too. For example, Binance is sitting at a huge reserve of over 62Billion USD, while FTX had only a Billion dollar USD liquid fund. Binance is clearly more transparent than its previous competitor.

And at the bottom line, we would like to show you how to transfer your crypto from Binance to BTCC exchange. It’s straightforward and doesn’t require advanced knowledge to complete the whole process.

A step-by-step guide to sending crypto from Binance to BTCC

Step 1. Go to the BTCC app, tap Deposit on the home page.

Step 2. Select the cryptocurrency and its network that you plan to deposit into your BTCC account. USDT-TRC20 will be chosen as an example.

Step 3. Copy the deposit address by tapping on the Copy address button.

Step 4. Leave the BTCC app for now. Log into your Binance account. Go to Wallet and click Fiat and Spot.

Then click Withdraw.

Select the cryptocurrency type and network that you have previously chosen on BTCC. Then paste the BTCC address that you have saved earlier and input the amount you would like to withdraw. Click Continue to proceed.

Step 5. Complete a verification questionnaire to proceed with the withdrawal.

Fill in the necessary information for the withdrawal verification.

After submitting your withdrawal request, you will see this window popping up, informing you that you will receive an email once the withdrawal is complete. Please note that the time needed for withdrawals to complete depend on different exchanges.

As stated on Binance’s website, withdrawals generally take between 30 to 60 minutes to complete.

Step 6. Now let’s go back to the BTCC app. You should be able to receive an app push notification notifying you of the deposit arrival. You can check the status of your deposit by tapping the top right corner of the Deposit page of each cryptocurrency.

You’re all set for futures trading.

Compared with the competitors on the market, BTCC offers a much wider range of futures contracts for its users. On BTCC’s web and app platform, you can trade daily, quarterly, and perpetual futures.

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