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0 CommentsBinance, the largest crypto exchange by volume traded, is not the next FTX, according a report from CryptoQuant. The analytics firm found the exchange is almost entirely collateralized and diversified away from its proprietary token.
CryptoQuant, the Seoul-based analytics firm points to on-chain data to support claims made in a recent audit that Binance is overcollateralized.
“At the time Binance’s Proof of Reserves report was conducted, CryptoQuant’s estimate of Binance’s BTC reserves (liabilities) was 591,939 BTC. This compares to the PoR report’s Customer Liability Report Balance of 597,602 BTC. We can see that CryptoQuant data covered 99% of Binance’s liabilities,” CryptoQuant wrote, adding that collateralization is 101% when taking the exchange’s assets and debtors into account.
Binance is not experiencing the same volume of outflows that FTX had in the days before its collapse, CryptoQuant wrote, citing on-chain data. While withdrawals have increased, they are small compared with the exchange’s overall reserves. In a tweet, Binance CEO Changpeng “CZ” Zhao said he “welcomes the stress test.”
The exchange’s Bitcoin reserves are up 4% since FTX’s collapse, CryptoQuant wrote. Reserves for ether and stablecoins are down 6% and 15%, respectively.
The analytics firm noted that Binance differs from FTX-Alameda in how “clean” the reserves are, or, to put it another way, how they’re not reliant on the exchange’s proprietary token, BNB. A CoinDesk report that showed FTX sister company Alameda Research was materially backed by the exchange’s FTT token kicked off a liquidity crisis that ultimately led to its bankruptcy.
For Binance, CryptoQuant says 88.95% of its reserves are clean. That compares with 56% for Huobi, 66.5% for Bitfinex, 81.64% for Kucoin, 97% for Crypto.com and 100% for OKX.
Data from Nansen pegs Binance’s total reserves at $57.4 billion versus $3.04 billion for Huobi, $2.47 billion for Kucoin, $3.36 billion for Crypto.com, and $6.67 billion for OKX. Nansen doesn’t have data for Bitfinex.
CryptoQuant assessed Binance’s level of clean reserve as “acceptable.”
Despite there have been some questions about the financial health of Binance, Hochan Chung, CryptoQuant’s head of marketing, points to the availability of on-chain data to corroborate all claims, even if you don’t trust the exchange’s published report.
“Proof of reserve provides a real-time, transparent, and non-manufactured data, which is the first-time ever in the history of the financial market. The data is self-audited through blockchain technology,” he said on Telegram.
According to CoinDesk data, Binance’s BNB token has dropped almost 3% in the last 24 hours to $265.
