It appears that Binance has not complied with the procedures for BUSD reserves in 2020, 2021
Currently, Binance's BUSD is fully supported by the US dollar, and Paxos' BUSD is not affected, according to a Binance spokesperson.
Binance did not comply with its procedures for BUSD reserves between 2020 and 2021 because it did not retain enough reserves to support its BUSD stablecoin, according to a Bloomberg report.
Mismanagement led to binance-peg BUSD undercolateralization three times between 2020 and 2021, with collateral gaps exceeding $1 billion each time, according to data shared by Jonathan Reiter, co-founder of blockchain analytics company ChainArgos.
In addition, Reiter’s analysis showed that the Binance-peg BUSD value released in Binance’s Smart Chain BNB network indicates that the exchange issued new BUSD tokens from Binance during this period, without providing the equivalent value of busd tokens issued by Paxos in its Ethereum wallet as collateral.
Noteworthy when users purchase Binance-Peg BUSD, Binance buys BUSD from Paxos and then monetizes the equivalent amount of Binance-Peg BUSD tokens on the blockchain they have selected. After that, users receive the Binance-Peg BUSD and an equal amount of BUSD is locked on Ethereum.
However, a spokesperson for Binance confirmed that the Binance-peg BUSD is currently fully supported and there has been no impact on the Paxos BUSD. He also claimed that previous events were due to operational delays.
The spokesman said:
( Recently the process has been greatly improved with improved discrepancy checks to ensure it is always 1-1 pegged. )
After the FTX debacle the previous year, Binance has suffered increasing customer withdrawals and shrinking trading volume. BUSD's withdrawals from the stock exchange have caused the supply of stablecoin to fall by more than 15% in 24 hours, according to reports from December 14.
However, Binance CEO Changpeng Zhao defended the exchange, saying the firm would emerge stronger from its challenges.
